Only conflict in Federated deal could be Woodies at White Marsh


With both a Woodward & Lothrop and Macy store, White Marsh Mall could be in for a shake-up if Macy's owner follows through on plans to buy most of the Woodies chain.

Federated Department Stores Inc., a Cincinnati-based chain with 354 department stores, has disclosed few details about its intentions, but says it will acquire at least 11 of Woodward & Lothrop Inc.'s 15 department stores. Three are in the Baltimore area -- Columbia, Annapolis and White Marsh.

But only the Woodies in White Marsh -- with about 200 employees -- goes head to head with another Federated department store. Whether that means Woodies would be eliminated is uncertain.

"It's not a question I can answer right now," said Carol Sanger, Federated vice president of corporate communications. "Only talking in general terms," she added, "it's not atypical" for the company to operate two department stores in the same mall, or to convert one to a smaller-scale home-retail store.

Federated operates two other Baltimore area department stores -- both Macy's -- at Owings Mills and Marley Station, but neither overlaps with a Woodies store.

If Federated acquires the White Marsh site, some industry observers believe it will get rid of either the Woodies or Macy's to avoid duplication. "They'll get out of one of them," said Peter Chapman, president of Princeton, N.J.-based Bankruptcy Creditors' Service Inc.

The Rouse Co., which owns the mall, has not received any word from Federated about its plans at White Marsh, said spokeswoman Cathy Lickteig. Rouse also owns the Mall in Columbia, which contains a Woodies store, but no Federated competitors.

Should Rouse lose one of its mall tenants, it has contingency plans. "We do for all our centers," Ms. Lickteig said. "We have a list of merchants that we would like to have at all our properties."

Broader questions about the deal may be premature if, as some industry analysts speculate, another bidder enters the fray to buy Woodies, which has operated under Chapter 11 bankruptcy protection since January 1994.

Such names as Dillard Department Stores, J. C. Penney and Sears have been floated, but May Department Stores is considered the most likely candidate. "Our policy is not to comment on speculation," said May spokesman Jim Abrams when asked whether the St. Louis-based company has, or would, submit a competing bid for Woodies assets.

Speculation about May has been fueled in part by the company's recent sale of $200 million in bonds, which Mr. Abrams said is being used for capital expenditures as well as "investments and acquisitions."

Even more, Woodies could help May Department Stores bolster its market position in the Philadelphia area, where May now operates only one store -- a Lord & Taylor.

Woodies' portfolio includes 14 John Wanamaker department stores in Philadelphia, New Jersey and Delaware.

But May, which operates 315 department stores, would likely find less use for 15 Woodies stores in the Maryland-D.C. market because May already operates 23 Hecht and four Lord & Taylor department stores in the region.

For May, which generated $782 million in net income on sales of $11.9 billion last year, acquiring Woodies may be a question of money. Woodies' sale to a four-member group led by Federated is expected to generate $640 million; the company had $863 million in liabilities as of April 20.

Under a bankruptcy order, a new bid must be no less than $30 million higher, Mr. Chapman said. "So at $640 million, the lowest possible bid would be $670 million. May now has to go back and say, 'Can we kick the price up by $30 million?' I don't know what the answer is."

More answers about Woodies' proposed deal with Federated are expected to be announced today, said Woodies spokeswoman Sandra Sternberg. Questions are not limited to which stores will be bought and which eliminated.

No decisions have been announced about the fate of Woodies' Baltimore distribution center, which employs about 320.

Federated, however, would assume the union contract with Local 400 of the United Food and Commercial Workers, Ms. Sternberg said, which will cover about 2,800 Woodies store employees and 700 other company staffers.

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