THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Saturday, September 14, 1996 TAG: 9609140520
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER
LENGTH: 82 lines
Belk's buyout of sister Leggett Stores will reunite two families that split in 1927, when the Leggett brothers set out to start their own department-store chain in southern Virginia.
Leggett Stores Inc., a privately owned company based in Danville, announced in a short statement late Thursday that it would be purchased by the Charlotte, N.C.-based Belk companies.
``Belk and Leggett have enjoyed a long association dating back to the early 1900s, and the Leggetts have been an important part of our mutual success,'' said John M. Belk, Belk's chairman and chief executive officer.
The transaction, which calls for Belk to purchase a majority of Leggett's stock, will close within the next two months. Officials did not disclose the purchase price.
Earlier this year, Leggett Stores acknowledged it was seeking a suitor. It received a buyout offer in February from a retailer rumored to be Knoxville, Tenn.-based Proffitt's Inc. or Little Rock, Ark.-based Dillard Department Stores Inc.
That deal fell through, and Leggett moved on to Belk's offer.
The purchase will include Leggett's headquarters in Danville and 43 locations, including four department stores and two Leggett Outlet Centers in South Hampton Roads.
No decisions have been made on whether Leggett store banners will be changed to the Belk name, said Darrell Williams, a spokesman for Belk Stores Services, a buying service for Belk's 220 stores and Leggett.
Belk officials also have not disclosed what will happen to Leggett's Danville headquarters and its management. Leggett executives did not return telephone calls Friday.
Locally, store managers declined comment on the buyout, but several mall officials said they felt comfortable.
``Belk is a good name,'' said Tammy Dodson, a spokeswoman for Virginia Beach's Lynnhaven Mall. ``I think the reputation they have and the fact that they're from the South will make it an easy transition for customers.''
Leggett's sale comes at a time when smaller department-store chains are struggling against titans like May Co., owner of Hecht's, and Federated Department Stores. Regional chains like Leggett and Proffitt's have concluded that they need to get bought out or get bigger - quickly.
``It's certainly very competitive,'' said Belk spokesman Williams. ``There have been new players in the market in the last five to 10 years. I imagine that's going to continue.''
By snagging Leggett, Belk made a defensive move to keep competitors out of the market, said Kenneth M. Gassman Jr., a retail analyst with Davenport & Co. in Richmond.
Belk's buying-service unit also will be assured of retaining Leggett's business, Gassman said. If Leggett had been sold to another company, Belk would have lost 43 stores from its supply network.
The Leggett and Belk names have been linked for about a century. John Belk, who helped the Belk chain in its early years, married a woman from the Leggett family. His nephews were the Leggett brothers.
Growing up, the five Leggett siblings - Fred, Will, Robert, George and Harold - worked at Belk stores.
But in 1927, the families split. Some published reports have indicated disagreements between the sides, but Belk's Williams said the Leggetts merely wanted to set out on their own.
That year, the brothers, led by Fred Leggett, opened the first Leggett store in Lynchburg. The two companies agreed that Belk would keep a 20 percent stake in the Leggett company - which it has retained until today. ILLUSTRATION: Leggett Stores Inc.
Headquarters: Danville
Founded: 1927
Number of stores: 43 stores, mostly in Virginia. They include six
in South Hampton Roads.
CEO: Robert A. Leggett III
Belk companies
Headquarters: Charlotte, N.C.
Founded: 1888
Number of stores: About 220 Belk department stores, mostly family
owned. The Belk companies also include Belk Stores Services, which
provides buying service and other support to Belk and Leggett
department stores.
CEO: John M. Belk by CNB