Belk Buying Proffit's and McRae's
By Cecile B. Corral -- Home Textiles Today, 5/2/2005 12:00:00 AM
Charlotte, N.C. — —
Charlotte, N.C. —The department store channel is being wrenched with yet another consolidation as Belk Inc. moves to acquire 47 of Saks Inc.'s Proffitt's and McRae's regional department stores, and Saks shops its remaining group of regional stores for a similar deal.
The Proffitt's and McRae's are located in 11 of the 14 Southeastern states where Belk stores currently operate.
Belk Inc. will pay $622 million for the stores, which together generated a combined total sales volume last year of approximately $700 million.
The transaction is scheduled to close on July 5 and is subject to regulatory review. Upon its completion, which has been approved by the boards of directors of both companies, Belk Inc.'s estimated annual sales volume will be $3.15 billion and its store count will grow to 275 stores in 14 states.
“This transaction solidifies and strengthens our position in the South,” said Tim Belk, chairman and CEO. “Proffitt's and McRae's are an excellent geographic fit. They give us a leading position in Tennessee and Mississippi and a stronger presence in nine other states. In addition, the combination will create synergies that will improve operating efficiency.”
The transaction includes 25 McRae's department stores — five in Alabama, four in Florida, two in Louisiana and 14 in Mississippi — and 22 Proffitt's department stores — one in Alabama, two in Georgia, two in Kentucky, one in North Carolina, one in South Carolina, 12 in Tennessee, one in Virginia and two in West Virginia. There are four McRae's units in Alabama that are not part of the transaction.
“Belk, Proffitt's and McRae's all share a loyal customer following and a reputation for community service that spans years,” said Belk. “We look forward to building on these traditions.”
Belk said it should take about 18 months to complete the integration of the stores. The company will also open a new distribution center in the fall of 2006.
Belk Inc. will offer all current Proffitt's and McRae's associates employment, and will operate the Proffitt's/McRae's headquarters in Alcoa, Tenn., for a transition period anticipated to last through September. After that, corporate associates in the Alcoa headquarters will either be offered positions with Belk or will be given appropriate severance packages.
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