THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Friday, July 15, 1994 TAG: 9407150535
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: By MYLENE MANGALINDAN, STAFF WRITER
LENGTH: Medium: 63 lines
The merger between R.H. Macy & Co. Inc. and Federated Department Stores Inc. has put plans for a new Macy department store in downtown Norfolk on hold, at least until next month, a company spokeswoman said.
``It's an area that needs to be addressed after the joint plan is filed,'' Laura Mellilo, Macy vice president of media relations, said of MacArthur Center, Norfolk's proposed downtown mall.
Macy and Federated will file a joint reorganization plan with the U.S. Bankruptcy Court by next month. At that point, business strategy teams from both companies will assess the future growth and expansion of their stores.
``We are going to file a plan by Aug. 1,'' Mellilo said. ``We'll pursue that. Until then, we're going to discuss the specific issues over the ensuing weeks,'' she said of the reorganization plan.
City officials appeared unruffled by the merger battle being waged in the corporate boardrooms of New York and predicted it won't affect Macy plans to be part of the $270 million mall here.
``That's not done yet,'' Norfolk economic development director Robert B. Smithwick said about the Macy-Federated merger. Norfolk's plans for MacArthur Center have not changed. ``It won't have any negative impact on our decision,'' he said.
Macy, Seattle-based Nordstrom Inc. and a third, yet-to-be-named department store, are supposed to anchor the three-story mall. The city hopes to start construction by December. It's unclear what would happen if Macy backs out.
``If Macy and Federated merge - that's not official - if they merge, then Macy will tell us where our letter of agreement stands in this process,'' Smithwick said. ``At this point, we think it will not be affected.''
In a written statement, the companies said that when a definitive merger agreement is reached and approved by their boards, they will file a joint reorganization plan for Macy. The merger must be approved by Bankruptcy Judge Burton R. Lifland. It is expected that with all the creditors supporting the plan, it will be confirmed.
A merger would mean layoffs as Federated eliminates duplication at the two operations. Macy has already shed 20,000 employees during its reorganization, and now has 50,000 on its payroll.
Because neither Macy nor Federated has stores in Hampton Roads, plans for a Macy store in MacArthur Center should not be affected dramatically.
Federated sought the merger primarily to enter new markets and to use Macy's national retail chain of Bullocks and Macy stores as a vehicle for sales growth.
A new joint Macy-Federated would catapult it into first place as the country's largest department store company. It would have 341 branches. May Department Stores Co., with 300 branches, would recede into second place.
The two companies will wrestle over the sale of overlapping stores, analysts said, since Federated and Macy compete with each other in the Northeast and the South.
Smithwick said the city would not begin negotiations with Federated but would continue talks with Macy directly. MEMO: The Associated Press contributed to this report.
by CNB