2nd Chain to Be Put on Block This Year : Carter Hawley Seeking Buyer for Wanamaker Unit in Philadelphia
Carter Hawley Hale Stores said Wednesday that it may sell its Philadelphia-based John Wanamaker division, which claims to be the nation’s oldest full-line department store chain. It is the second chain of stores that the company has moved to sell this year.
The Los Angeles company--parent of the Broadway, Neiman-Marcus and other chains--said proceeds from the proposed sale would help reduce debt and strengthen its balance sheet.
Separately, Standard & Poor’s removed Carter Hawley from its “credit-watch” list, calling the proposed Wanamaker sale a “significant, positive development.” But it left the company’s ratings unchanged at BBB- on about $250 million of debt obligations. (S&P; says a BBB rating means that the company has “adequate capacity” to repay the debt but that “adverse economic conditions or circumstances are more likely to lead to risk.)
The debt rating service said it has “serious doubts” that the company can achieve “a turnaround in profitability sufficient to contribute to a significant improvement in the balance sheet.”
S&P; said it is “skeptical” about the success of Carter Hawley’s new customer service strategy, which seeks to improve sales by being more attentive to customers.
In commenting on the S&P; move, a Carter Hawley spokesman said, “We’re happy they decided to affirm our credit rating, but we strongly disagree with the criticisms of our strategy.”
Carter Hawley said it has hired Morgan Stanley & Co. to find a buyer for the 16-store John Wanamaker chain, which it purchased in 1978 for $60 million in cash from the Wanamaker Trust.
A company spokesman said the chain had 1985 sales of $450 million and is profitable. Morgan Stanley is talking to prospective buyers, the spokesman said, but he declined to identify the interested parties.
Philip M. Hawley, chairman and chief executive, said in a statement: “Despite Wanamaker’s prospects for continued financial improvement, Carter Hawley Hale is considering the possible sale of Wanamaker because of the company’s commitment to strengthening its balance sheet and devoting corporate resources to accelerating modernization and growth in its other retailing operations.”
In April, Carter Hawley sold its 16-store Holt Renfrew chain of Toronto to Wittington Investments Ltd. in Canada for $29.7 million.
Linda Kristiansen, an analyst with Paine Webber in New York, said the proposed sale of Wanamaker is a “positive” development. She said Carter Hawley spent a good part of the 1970s growing by acquiring department stores and some were successful, but “Wanamaker was among those that were not as successful as hoped.”
Carter Hawley closed on the New York Stock Exchange at $35.25, up 37 1/2 cents, on a volume of 112,400 shares.
