Bullock’s Slips Further From Its Proud Past
Soon after Bullock’s was bought by Federated Department Stores in 1964, Federated President Ralph Lazarus told executives of the venerable Southern California chain to think hard about tearing out the decorative fountain inside the Pasadena store.
“He asked us, ‘If you’re such great merchants, why isn’t there merchandise there?’ ” said Frank Rice, a retired Bullock’s vice president.
Bullock’s executives argued that the fountain was a community landmark, a space where customers could relax and where the store put up its Christmas tree every year. So, Lazarus let the fountain stay--a decision that symbolized the key role of local management in running the then-successful chain.
But after New York-based R. H. Macy & Co. bought Bullock’s in 1988, the business philosophy shifted. The fountain was replaced by a cosmetics counter. And, in a move that analysts say contributed to the chain’s recent slump, Macy’s dismantled Bullock’s respected staff of buyers responsible for merchandise and transferred the work to a regional office in Atlanta.
Once the epitome of upscale Southern California retailing, the 85-year-old Bullock’s chain has been dragged by its ailing parent company into the growing ranks of distressed merchants. Industry analysts say Bullock’s merchandise fell out favor with many Southern California customers since the chain was bought by Macy’s.
Now, with Monday’s bankruptcy court filing by Macy’s, Bullock’s finds itself in a situation like many other recession-plagued department store chains--it bears a proud past and an uncertain future.
Bullock’s follows a major competitor, the Broadway division of Carter Hawley Hale Stores, which filed for bankruptcy court protection last February but has since secured an investor to help it reorganize. Buffums, another old-line Southland department store chain, was liquidated last year.
Department stores generally have been hammered by a slowdown in consumer spending over recent years, but the 22-store Bullock’s chain has fared worse than some competitors. According to surveys by The Times’ marketing research department, the percentage of households in Los Angeles and Orange counties that have someone who shops at Bullock’s dropped from 34.9% in 1988 to 18.4% last year.
Over the same period, Robinson’s department stores declined from 33.4% to 22% and Nordstrom fell from 32.2% to 24.4%.
“Unfortunately, Bullock’s was bought at the top of the California market,” said Barbara Wedelstaedt, an analyst with the investment firm Duff & Phelps. Since then, she said, Bullock’s results have been “below expectations,” with declining operating profits.
Although Macy’s doesn’t release financial data for Bullock’s, Wedelstaedt estimated that the chain’s annual revenue stands around $900 million.
A spokesman for Macy’s said it is “premature to speculate” on what impact the bankruptcy filing will have on Bullock’s. The spokesman added, however, that the plans that Macy’s announced last year to open five new Bullock’s stores in Southern California should remain on track.
Macy’s has five Orange County sales locations: an I. Magnin at Fashion Island in Newport Beach and Bullock’s stores in the Mission Viejo Mall, at MainPlace/Santa Ana and at South Coast Plaza in Costa Mesa. At South Coast, there is both a main store and a separate 80,000-square-foot men’s store.
Macy’s officials would not discuss staffing at its Orange County stores. The men’s store, which features designer clothing, opened last year in a building converted from an I. Magnin, which had employed 100.
Analysts predicted that Macy’s might close or sell a handful of Bullock’s weaker locations as it reorganizes in bankruptcy court under Chapter 11 protection. But now that Macy’s has received bankruptcy financing and thus is no longer desperate for cash, analysts said, it is unlikely the company will sell the entire division.
A more likely candidate for sale, they said, would be Macy’s San Francisco-based I. Magnin division or, perhaps, the Atlanta-based Macy’s South division.
“My sense is that (Bullock’s) still has a very strong franchise in Los Angeles, especially at the upper end of the market,” said M. Jeffrey Branman, managing director of the investment banking firm Financo.
Macy’s was pushed into bankruptcy by the debt from, among other things, the $1.1-billion deal through which it acquired Bullock’s, I. Magnin and the former Bullocks Wilshire stores now operated by I. Magnin.
On top of the debt problem, Bullock’s itself was hurt by Macy’s cost-cutting decision to shift its buying operations from Los Angeles to Atlanta, analysts said.
In an apparent effort to get back in touch with Bullock’s customers, Macy’s in August announced a reorganization that includes plans to move its main merchandise buying office for Bullock’s to San Francisco, where the Macy’s California stores are based.
Merchandise and service suppliers to Bullock’s and other Macy’s chains were the hardest hit by the bankruptcy filing, but those contacted Monday say they plan to continue doing business with the chains. “Bullock’s has been a good partner, and I think we can work out our problems,” said Linda LoRe, president of perfume marketer Giorgio Beverly Hills.
The first Bullock’s store was opened on the corner of Broadway and 7th Street in downtown Los Angeles in 1907 by John G. Bullock and P.G. Winnett, Canadian immigrants and retailers. The store started with a $250,000 investment from Arthur Letts, who founded the Broadway, and Bullock’s remained part of the Broadway chain until the 1920s.
In 1929, the second Bullock’s store opened on the Miracle Mile section of Wilshire Boulevard. That store--known for its Art Deco tower--later became the flagship of the former Bullocks Wilshire chain and, more recently, was merged into I. Magnin.
The downtown Los Angeles store thrived for many years, offering bridge lessons, lectures and puppet shows around the holiday season. It also planned birthday parties for children of celebrities.
In 1947, Bullock’s opened its first suburban branch, in Pasadena.
The chain was acquired by Cincinnati-based Federated in 1964. In 1988, after Macy’s lost a bidding war with Toronto-based Campeau Corp. for Federated, it cut a deal to buy Bullock’s, I. Magnin and Bullock’s Wilshire from Campeau.
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