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Big retailer shops for answers
Meier & Frank parent gets some gloomy news as stores struggle
Gene Kahn, chief executive of May Department Stores Co., told shareholders at the company's annual meeting in May that 'all of our initiatives focus on growing sales by creating a better shopping experience.'
But a turnaround has yet to take hold.
In June, the May Co. confronted several gloomy developments:
The company laid off 1,500 workers nationwide, approximately 1.3 percent of its work force. About 30 people at the nine Meier & Frank stores in Oregon and Washington lost their jobs, May spokeswoman Sharon Bateman said.
The same month, both Moody's Investors Service Inc. and Standard & Poor's Ratings Service lowered their ratings on May's debt. Neither firm dropped its rating below investment grade. But Standard & Poor's said the action, which affected about $3.9 billion of debt, 'reflects a continuing decline in May's performance.'
Meanwhile, analyst Linda Kristiansen of UBS Investment Research delivered another blow. She recommended that investors sell their May stock and purchase shares in rival Federated Department Stores Co.
Kristiansen said the two companies' strategies and execution 'are diverging to a greater extent than we can ever recall.' And she said she expects Federated, parent of Seattle-based the Bon MarchŽ, to continue gaining market share Ñ at May's expense.
May, with 443 department stores, had sales of $13.3 billion in the last 12 months. Federated, with 460 stores, reported annual sales of $15.3 billion.
Still, both companies have had declining sales reports. For the five weeks that ended July 5, for example, May reported that same-store sales Ñ a standard measure in retailing Ñ declined 5.9 percent from the same period in 2002.
'Retailing is a tough business,' said Lois Huff, senior vice president of Retail Forward, a research and consulting firm in Columbus, Ohio. Where department stores are concerned, she said, 'It's not a matter of who's going to win, it's a matter of who's going to survive.'
Retail analysts did praise May for its move last year to consolidate its 11 department store chains into six divisions. But department stores continue to struggle Ñ beset by the bad economy, shifting consumer preferences and the growth of discounters.
Thus far, May has made no moves to upgrade its Meier & Frank flagship store in Portland. Representatives of May and the city talk regularly about renovating the historic building, which Lew Bowers, a senior development manager for the Portland Development Commission, called 'almost an icon for downtown Portland.'
With the first five floors renovated for retail, the building's top nine floors could be used for offices, condos or a hotel. A variety of ideas have been discussed with developers, Bowers said. 'We're looking at every possible use.'
Some former Meier & Frank staff members have a fondness for time spent at their former headquarters.
An informal reunion is being held Saturday, Aug. 2, for Meier & Frank employees who were laid off a year ago when May Co. closed the administrative offices in the downtown Portland store.
One of the organizers, former Meier & Frank invoice analyst Mark Sustello, said a 'nonchalant' reunion will begin at 10 a.m. in Pioneer Courthouse Square, near the bronze sculpture of a businessman carrying an umbrella.
Many of the 600 people laid off are working for other companies or elsewhere in the May Co.; some have retired, and others still are seeking permanent employment, he said.
Contact Jeanie Senior at