Southern California Department Stores Expect to Have Higher Sales This Year

In the wake of R. H. Macy & Co.’s filing for court protection from creditors, other department stores in the Southland are checking their temperatures as the recession continues its infectious path.

The retail industry has been turbulent in recent years, with a handful of major department stores filing for bankruptcy protection. Federated Department Stores, operator of the Bloomingdale’s and Lazarus chains, filed for Chapter 11 bankruptcy protection along with Allied Stores Corp. in 1990. Both are expected to emerge from bankruptcy in mid-February.

Buffum’s closed its 16 stores in 1991. Carter Hawley Hale Stores, owner of Broadway and Emporium, filed for Chapter 11. Then there are Bullock’s and I. Magnin, owned by Macy’s.

Industry analysts note that while business has been sluggish the past three years, it should slowly get better this year. Many stores have lowered prices and launched renovation projects to attract clientele.

Shoppers can expect more conservative clothing as retailers in ill health clamp down on inventories.

Here’s a look at some retailers’ prospects:

Kmart--Attention, Kmart shoppers: Take note of an updated look in stores near you as Kmart continues its remodeling program to entice more customers in 1992.

Begun last year, the program should boost 1992 sales, managers say. But sales haven’t been that bad. Holiday sales for December were up 10.6 %, and, for the first 11 months of 1991, sales increased by 3.4% at stores open more than a year. The year’s results weren’t available.

“We have done reasonably well in the recession and have not been hurt badly by it,” said Orren Knauer, director of investor relations. He attributed Kmart’s success in part to the nature of its products. Discount stores, he said, tend to do better in a recession.

“We didn’t have to resort to taking a meat-cleaver approach to reducing expenses,” he said.

Sears, Roebuck & Co.--The Chicago-based company’s 868 outlets have experienced a surge in sales since the weekend before Christmas. Sales for the two-month holiday season were up 3.6% compared to 1990.

The invigorated business can be attributed to aggressive marketing programs and the fact that the company did badly in 1990 because of consumer skittishness during the Gulf War, spokesman Perry Chlan said.

Sears stores open and close for relocation on a routine basis, Chlan said, but there are no plans to close stores permanently for the upcoming year.

“We are a very strong company,” Chlan said. “We have become known as a company that has a commitment to core values of trust and integrity, quality and superior merchandise value.”

May Co. and Robinson’s--May Department Stores are healthy, with more than $20 billion in net worth, retail analysts say. Although 1991 was a tough year for the Missouri-based company, sales are estimated at near the 1990 figures.

Although the holiday season was disappointing, the New Year has encouraged store managers--it has seen a 5% sales increase. In 1991, May Department Stores opened two stores in Southern California. This year it plans two more openings. The locations haven’t been specified.

“May is in a particularly strong position because of its financial strength and the merchandise savvy of the company,” said Tom Tashjian, a research analyst for First Manhattan. “It’s a stronger competitor than Bullock’s or I. Magnin.”

J.C. Penney--1991 was a difficult year for the Dallas-based department store chain, but managers look forward to a more profitable 1992, with store remodeling and a healthy inventory mix.

In the late 1980s, Penney experienced substantial sales increases. The recession hit in 1990, however, pushing sales for the first nine months of 1991 down 2.5%.

But a late-Christmas rebound--spurred by lowered prices and cuts in advertising and salary costs--makes Penney optimistic that there will be modest gains the first half of the New Year. Of its 1,300 stores across the country, no more than 10 are expected to close.

“We feel better about 1992 because of our spring merchandise and the favorable results from January,” spokesman Duncan Muir said.

Target and Mervyn’s--Minneapolis-based Dayton Hudson Co. operates Target and Mervyn’s stores that, when combined, make up the largest retailer in California in terms of sales. There are about 70 Target and 52 Mervyn’s stores in Southern California.

The $15-billion company says it is doing well because of its diverse inventory. Target stores offer recession-proof items such as personal care products, while Mervyn’s specializes in clothing.

“Business has been better in January,” spokeswoman Ann Barkelew said. “But we’re looking very conservatively and don’t expect to see much. Any recovery that happens will come in the second half of the year and will be gradual in coming.”

Next year it will launch a $1-billion store remodeling program.

Broadway--Carter Hawley Hale Stores, the parent company of 42 Broadway department stores in Southern California, is working through its financial problems after filing for court protection from creditors in February, 1991.

The Zell/Chilmark fund, an investment fund based in Chicago, purchased 80% of creditors’ $570-million stake in Carter Hawley Hale last October.

Last year, Carter Hawley Hale announced the possible closing of eight to 10 stores. It is still unclear if this will happen. Also uncertain is when the company will emerge from bankruptcy--although it should happen this year.

“We continue to be very conservative, keep a tight rein on inventories and are looking for opportunities to cut our expenses,” spokesman Bill Dombrowski said.

How Southland Retailers Are Faring

R. H. Macy & Co. signed up Monday for the favorite retail cure--protection from creditors under Chapter 11 of the U.S. Bankruptcy Code. Its rivals, for the most part, are in better health:

* R. H. Macy & Co.: Ailing. But this week’s filing for bankruptcy protection--along with a $60-million loan infusion--means the parent of Bullock’s and I. Magnin could be on the road to health.

* Carter Hawley Hale Stores: Recuperating. It is unknown when the owner of Broadway and Emporium will emerge from Chapter 11. But a recovery is under way, thanks to the Zell/Chilmark fund.

* Target and Mervyn’s: Owner Dayton Hudson Co. is healthy, but says it will behave conservatively in 1992. A face-lift for stores is scheduled for 1993.

* J. C. Penney: After a sickly 1991, the firm rebounded in January.

* May Co. and Robinson’s: The holiday season was disappointing, but May Department Stores are robust compared to much of the competition.

* Sears, Roebuck & Co.: In fine financial health, with no plans to close stores.

* Kmart: Hale and hearty, with a face-lift under way.