One Goes Private, Other Closes : Macy’s and Gimbels Go Their Separate Ways in the Big Apple

Though Adam Gimbel and Rowland Hussey Macy were men of vision, it is safe to say that events Thursday would have boggled the imaginations of those 19th-Century merchants.

On a balmy afternoon on 33rd Street in Manhattan, the venerable Gimbels Department Store--started by Adam Gimbel in 1842--was preparing to close permanently. Thursday was the last day of business as usual, to be followed by a three-month liquidation sale.

Meanwhile, at a hotel next door, Macy’s was being sold for $3.7 billion. Shareholders overwhelmingly approved the sale of the company, founded in 1858, to a group of Macy managers.

For those New Yorkers who noticed and cared, the attitude seemed to be: Gimbels is dead. Long live Macy’s. It was a shame to see an institution die, but, most agreed, Macy’s had proved itself the more adept merchant.

With few customers to keep them busy, workers at Gimbels clustered near cash registers Thursday, talking in hushed tones about seniority and severance pay.

Mary De Luca, a 40-year Gimbels employee in women’s shoes, grumbled that Batus, the U.S. holding company for BAT Industries of London, had “let the chain run into the ground” after buying it in 1973.

“We employees were so dedicated,” she said. “The store used to be run like a family affair. Members of the Gimbel family would come down the aisles and greet you.”

She and two co-workers, who among them had 97 years of service, bemoaned the store’s inglorious end. Both the flagship Herald Square store and another on Lexington Avenue at 86th Street will close permanently, with a loss of 5,000 jobs, after a weeklong inventory count followed by the liquidation sale.

Batus, which has been selling off the chain since January, said it is continuing to negotiate with several parties for the Manhattan stores. Observers expect the sites to be redeveloped as retail and office space, although Gimbels workers said they hold a faint hope that Matthew D. Serra, Gimbels’ president and chief executive, will arrange a leveraged buyout and continue operations.

At least one shopper roaming Gimbels’ dingy aisles at lunchtime wasn’t aware of the store’s fate.

“I’ve always found it to be very reliable, the prices all right and the personnel very courteous to me over all these years,” said Ann Hopgood, who has shopped at the Herald Square store for 40 years. “I’ll miss the stores.”

Next door in the Penta Hotel, Macy’s shareholders had gathered to consider a proposal by Chairman Edward S. Finkelstein and others to convert the company to private ownership. Gimbels and Ohrbach’s, another New York retailer that announced its closing this week, were on people’s minds.

One shareholder said of the closings: “It’s very sad.” But she brightened when asked about the Macy’s buyout. “It’s a great deal. You’ve asked the right person,” said Barbara Handler. Indeed. Her husband, Mark, is Macy’s president and a participant in the deal.

Several shareholders voiced opposition, contending that the price was too low and that the transaction was not tax-free. Stockholders will receive $68 a share.

Evelyn Y. Davis, a corporate gadfly, said she wore black “in mourning for Macy’s,” the store where she said she first shopped after arriving in the United States 40 years ago.

Despite Wall Street concerns that the buyout group has encountered snags, Finkelstein said that “the financing is essentially in place. Everyone is hard at work, and I anticipate a closing by the end of the month.”

More than 78% of the shareholders voted to approve the deal.

As it turns out, perhaps Macy’s should have told Gimbels a thing or two after all.

“Macy’s was in tune with evolving customer tastes,” said Joseph C. Ronning, an analyst with Brown Bros., a commercial bank and brokerage house in New York. “The upgrading that took place at Macy’s was exactly what should have taken place at Gimbels. Gimbels gave up the customers by default.”