Word: bonwit
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Upscale department-store chains have been among the most fashionable U.S. targets for foreign investors. Like well-heeled Christmas shoppers, they scooped up some of the most famous names in American retailing, from Bloomingdale's to Bonwit Teller. Now several store chains are suddenly up for sale again, creating a sense of turmoil in retailing just as it heads into its busiest season...
...only begun ; to pay the price. A onetime machinist's apprentice and a self-made real estate tycoon, Campeau, 66, borrowed his way to the top shelf of the U.S. retailing industry. He spent $3.6 billion in 1986 to buy the Allied group of stores (holdings: Brooks Brothers, Bonwit Teller and Jordan Marsh). Last year he won a $6.6 billion bidding war with R.H. Macy for control of Federated Department Stores, a costly victory that gained him a crown jewel for his retailing kingdom: Federated's glittering, 17-store Bloomingdale's chain. But now Campeau is being forced...
Campeau had created problems for himself at a headlong pace. Even as he scooped up retailers, Campeau made plans to build dozens of big department stores. While he spun off such acquisitions as Brooks Brothers and Bonwit Teller to pay part of his $11 billion debt, he insisted that his remaining chains could churn out enough cash to make interest payments, finance expansion and yield profits as well. Instead, the cash registers rang slowly as the retailing industry suffered from stagnant consumer spending...
...Altman and Bonwit Teller are not the sort of stores that stiff their suppliers. But since the spring, several fashion houses have withheld shipments to the swank Manhattan department stores because of late payments. The stores have been caught in the enormous debt problems of their current owner, Australia's Hooker Corp., which is controlled by investor George Herscu. Last week Hooker's U.S. holding company sought protection from its creditors under Chapter 11 bankruptcy...
...trouble last year. Hooker, Australia's second largest home builder, has been hit by rising interest rates and sagging home sales in Australia, as well as lukewarm retail sales in the U.S. Herscu is now trying to sell off $750 million in assets, from Manhattan to Melbourne. Altman and Bonwit, meanwhile, are hoping to satisfy their creditors in time to sell some fall fashions...