Macy Plans to Phase Out Magnin Chain

R.H. Macy & Co. today will announce plans to phase out the 118-year-old I. Magnin chain by putting eight of the 12 I. Magnin stores up for sale and establishing different specialty stores at the remaining sites.

I. Magnin stores, including one in Newport Beach, will continue to operate for now. However, if Macy is unable to find a buyer for the eight stores, the New York-based retailer is expected to close these locations before it emerges from bankruptcy reorganization sometime in late December as part of a planned merger with Federated Department Stores, sources said Thursday.

Macy will disclose the four stores it will retain when it unveils its sales and conversion plan for I. Magnin today. A list of four stores has been drawn up, but executives Thursday were still considering changing some of the selections on that list, sources said.

Macy hasn’t revealed the fate of its I. Magnin’s store at Fashion Island in Newport Beach. And, the Irvine Co., which owns the shopping center, “has no official word from Macy on their plans,” according to spokeswoman Dawn McCormick.

In addition to the Orange County store, the upscale specialty apparel retailer headquartered in San Francisco has one store in Phoenix and 11 stores in California. The other California sites are in Beverly Hills, Woodland Hills, Palos Verdes, Pasadena, San Diego, Palm Desert, Walnut Creek, Palo Alto, Carmel and San Francisco.

The phaseout of I. Magnin would mark the final chapter in one of California’s oldest retailing sagas. The company was founded in 1876 by Mary Ann Magnin, an accomplished seamstress who began modestly by designing and making clothing for individual customers in San Francisco. She named the company after her husband, Isaac, who was not involved in the business.

A likely scenario, sources said, is that the four stores Macy retains will be converted into either Macy’s Men’s stores or men’s stores in the Bullock’s chain, which Macy owns.

There had been speculation that Macy would shut down or sell part of the financially troubled I. Magnin chain and convert some of the remaining stores into Bloomingdale’s, a chain operated by Federated. However, some industry analysts said the I. Magnin sites are too small to operate as Bloomingdale’s stores.

Bloomingdale’s has announced that it wants to open four stores in Orange and Los Angeles counties. The chain has been negotiating with owners of both Fashion Island and South Coast Plaza, but store executives said earlier that they intend to build new stores rather than take over existing space.

Meanwhile, Macy has been expanding its Bullock’s Men’s and Macy’s Men’s stores, and the size of I. Magnin stores is suitable for such a conversion.

Macy has been quietly holding discussions with possible buyers of eight sites. Jacobson Stores Inc., a specialty apparel retailer based in Jackson, Mich., and the St. Louis-based May Department Stores, operator of the Robinsons-May department store chain, are among the companies that have taken part in such discussions, sources said.

Officials from those two retail companies could not be reached for comment. May Department Stores operates Lord & Taylor, a chain that may want to establish itself at some I. Magnin sites. Jacobson may also want to establish some of its stores at I. Magnin sites.

Shopping at I. Magnin has been a family affair for some Orange County residents.

Newport Beach resident Sandy Glain, 34, first shopped I. Magnin when she was a preschooler in Fallbrook, in Northern San Diego. Her family made regular trips--starting with the old Orange County I. Magnin store in a since-demolished building where MainPlace/Santa Ana mall now sits.

“I love the ladies who work here,” Glain said Thursday afternoon. “With Buffums already gone and this closing, I don’t know what I’m going to do.”

Glain learned about the dedication of I. Magnin’s sales staff when, at age 25, she returned to the Orange County store after a long absence. “The saleslady, who was named Mrs. Tillis, still remembered me,” Glain said. “She asked if we still lived in Fallbrook.”

I. Magnin was “always the place our family did its Christmas clothing shopping,” said Jeanne Didion, 30, another Newport Beach resident who has shopped I. Magnin since she was a child. “I still remember when I was a little girl and got my first pair of Christian Dior satin panties,” Didion said.

But I. Magnin means more than memories for Didion, who is now store manager of the Francoli Gourmet Emporio shop just steps away from I. Magnin.

Smaller shops at Fashion Island depend upon the drawing power of large, prestigious department stores for foot traffic, Didion said. So, if the store closes, the mall needs to snare another upscale department store “to protect its credibility,” Didion said. “We need to get a Bloomies or a Bergdorf Goodman, or some other big East Coast name.”

I. Magnin’s problems were obvious to first-time shopper Kathy Damelio, who moved to Newport Beach a month ago from Boston. “I was just walking through the store wondering why it was so empty,” Damelio said. “Back East, department stores are crowded with people.”

The loss of another well-known department store could dull the luster of Fashion Island, an outdoor shopping center that targets upscale customers. The center surprised some shoppers in 1992 when it replaced a closed Buffums department store with Circuit City, a discount electronics chain. In recent years the mall has also added a Hard Rock Cafe, a Barnes & Noble bookstore, and a Cheesecake Factory restaurant.

Although Macy plans to abandon I. Magnin as a store format, it will retain and expand the profitable I. Magnin catalogue business. By doing so, Macy can also use the expertise and labor of catalogue division personnel to help launch and operate a television shopping channel.

Macy last year announced that it had forged a partnership with Don Hewitt, producer of CBS’ “60 Minutes” program, to develop a cable shopping channel. Like catalogue operators, television shopping enterprises take orders and deliver merchandise by mail. Federated has indicated that work on the shopping network will continue after it merges with Macy.

The impending merger of Federated and Macy--a deal approved in August by the companies’ two boards--may have marked the beginning of the end for I. Magnin. The retailer has been hobbled in recent years by the weak California economy, flagging nationwide demand for apparel and fierce retail competition, and there was speculation that the chain would be closed or sold before the Federated-Macy merger agreement.

The speculation increased after Federated successfully wooed Macy because the combined company is expected to consolidate or close inefficient or unprofitable operations. Macy does not release the earnings of its separate units, but some industry analysts have said that I. Magnin has been unprofitable in recent years.

The venerable department store company was known almost from the beginning as a favorite place for upscale shoppers. I. Magnin stores in San Francisco were the first retail businesses in the city to be furnished with fine cabinetwork, elegant showcases and gilded mirrors.

I. Magnin began to sell ready-to-wear clothing in 1909. The company grew rapidly in the early 1900s, opening branch shops in exclusive hotels in Santa Barbara, Del Monte, Coronado and Pasadena, and then full-line stores along the California coast during the go-go retail explosion of the 1950s and ‘60s.

In 1944, I. Magnin and Bullock’s merged as a corporation. I. Magnin and Bullock’s were acquired by the Cincinnati-based Federated Department Stores in 1964. In 1988, Macy acquired Magnin and Bullock’s from Federated, only to eventually strike a deal to merge with that company.

Times staff writer Greg Johnson in Costa Mesa contributed to this report.