Lord & Taylor leaving Downtown

By Michael Yeomans
TRIBUNE-REVIEW
Thursday, July 31, 2003

For the second time in a year, May Department Stores Co. dropped a bomb on Downtown Pittsburgh.

Less than three years after gutting the marble interior of a landmark Pittsburgh building, once the headquarters of Mellon Bank, to open a $30 million Lord & Taylor department store, the company said Wednesday it wants to sell or close the store and leave town.

Last summer, the St. Louis-based company combined its then-Pittsburgh-based Kaufmann’s division with its Filene’s division, consolidating the management of the two in Boston, where Filene’s is based. The move cost Downtown about 1,200 jobs.

Shocked city officials are scrambling to find out what their legal options are.

Mayor Tom Murphy, who was notified of the Lord & Taylor plans yesterday by a senior May Co. official, said the chain could be required to operate the store for at least another two years as part of a deal in which it received an $11.75 million loan from the city’s Urban Redevelopment Authority.

“The city and URA incorporated a clause into the original agreement requiring Lord & Taylor to operate their Pittsburgh store for a minimum of five years, and we look forward to discussing these issues in further detail with the May Co.,” Murphy said in a statement.

May Co. said the Downtown Lord & Taylor, which opened in November 2000, was an underperforming store in its brief life.

“That store did not achieve a suitable level of performance and did not support efforts to turn it into an upscale fashion retailer,” company spokeswoman Sharon Bateman said.

Bateman said the store will operate as usual until the company sells it or closes it. She declined to speculate when that could happen.

In all, May said it intends to sell or close 32 stores in 15 states, including two in Pennsylvania — Downtown and Harrisburg. The chain also has four stores in the Philadelphia area. May will keep 54 stores open in 11 states and the District of Columbia as it repositions the chain as a more upscale boutique. May also said it will close two other stores it operates.

The company said the moves will cost it $380 million, but ultimately yield savings of $50 million a year. About 3,700 employees will be affected, and May said severance and retirement benefits will be available for those who qualify.

Jane Elfers, chief executive of Lord & Taylor, said the stores to be closed represent 38 percent of the chain’s locations, but only 19 percent of its sales.

Customers at the Downtown store were surprised by the announcement.

Lois Peters, of Uniontown, was in Pittsburgh yesterday specifically to shop at Lord & Taylor for a dress for her daughter, Mackenzie. She said she will be disappointed to see the store close.

“Some stores are just special. This is one of them,” she said. “We knew what we wanted, and it was right there.”

Carol Epps, 42, of Greentree, said she will have to switch over to Saks Fifth Avenue.

“(Lord & Taylor) has a nice selection and seemed to be more on the higher end,” she said.

Steve Baumgarten, a retail analyst for Parker/Hunter Inc. in Pittsburgh, said the city might attempt to once again lure Seattle-based Nordstrom to Pittsburgh to fill the Lord & Taylor space.

A Nordstrom spokeswoman said yesterday the company has no plans for a store in Pittsburgh. Mayor Murphy, in his initial plan to redevelop the Fifth and Forbes corridor, made landing a Nordstrom store a cornerstone of his plan.

Baumgarten said May did too little to differentiate Lord & Taylor from Kaufmann’s. The area’s flagship Kaufmann’s store Downtown is next door to Lord & Taylor.

“I shop at both, and there is a lot of similar product in both stores. They cannibalized each other,” he said.

Margaret “Midge” McCauley, director of Downtown Works — a division of Kravco, the Philadelphia company picked by Murphy to put together a redevelopment plan for the city’s Fifth and Forbes and Market Square areas — tried to put the best face on the Lord & Taylor decision.

“I think we can go forward without it. You still have three department stores, which is more than most cities have,” she said. “I’m very upbeat about Pittsburgh. You’ve got all the elements in place for a successful revitalization of Downtown.”

Department stores in general are suffering at the hands of discounters such as Wal-Mart, Target and Kohl’s.

Through the month of May, May Department Stores has suffered declining same-store sales for 13 consecutive months. Department store chains are doing several things to attempt to reverse their slide.

Last month, May fired about 1,500 employees, about three or four in each of the company’s 447 stores, after cutting 1,600 jobs last year in the combination of Kaufmann’s and Filene’s.

On Friday, Federated Department Stores Inc. will unveil its new Lazarus-Macy’s name in its five regional stores, including its Downtown location. The move is an attempt by Cincinnati-based Federated to establish a national brand by using the familiar Macy’s name.

In addition to the name change, Cincinnati-based Federated has identified Pittsburgh as one of six regions where it will spend $100 million in an attempt to make its stores more convenient for shoppers.

Some of the changes include more signs, automated price scanners throughout the stores, lounges in the fitting rooms and the addition of “upscale” shopping carts.

Richard Istvan, store manager for the Jos. A. Banks Clothier Downtown, said Lord & Taylor’s departure will mean less customer traffic in the Fifth Avenue corridor.

“I’m surprised they’re going before Lazarus,” he said.

Lord & Taylor stores on closings list

Here is a list of the 34 stores that May Department Stores Co. plans to close. All are Lord & Taylor stores unless otherwise noted:

COLORADO — Three stores in Denver.
CONNECTICUT — Stores in Manchester and Meriden.
GEORGIA — Three stores in Atlanta.
FLORIDA — Two stores in Miami; one each in Boca Raton, Ft. Lauderdale, Orlando, Palm Beach County and Tampa.
IOWA — One Famous-Barr store in Des Moines.
KENTUCKY — One store in Louisville.
LOUISIANA — One store in New Orleans.
MARYLAND — One store in Baltimore.
MASSACHUSETTS — One store in Springfield and one store in North Attleboro.
NEBRASKA — One Jones Store in Omaha.
NEW YORK — One store in Albany.
NORTH CAROLINA — One store in Raleigh.
OHIO — One store in Columbus.
PENNSYLVANIA — One store in Harrisburg and one store in Pittsburgh.
RHODE ISLAND — One store in Providence.
TEXAS — Two stores in Dallas/Fort Worth and three stores in Houston.
VIRGINIA — One store in Norfolk.
By The Associated Press

Michael Yeomans can be reached at myeomans@tribweb.com or (412) 320-7908.