Broadway May Sell Its Out-of-State Stores : Retailing: 12 properties in fast-growing Southwest region could fetch more than $200 million.
Broadway Stores Inc. said Thursday that it has received several unsolicited offers to purchase stores it operates outside California and that it is exploring the possibility of selling all 12 of the properties.
The Los Angeles-based retailer said it has not yet determined whether to sell the stores in Colorado, New Mexico, Arizona and Nevada. Analysts said they could fetch $200 million or more.
If the stores are sold, Broadway would be left with 71 outlets--operated under the names The Broadway, Emporium and Weinstocks--all in California. Analysts said the revenue would give the firm, which emerged from bankruptcy in 1992, greater financial flexibility.
“About 90% of our revenue comes from California, and we may want to focus on our core business,” said David Dworkin, the company’s president and chief executive. “California presents us with much greater opportunities.”
The company’s board authorized the exploratory process to determine if such a sale would enhance shareholder value, said John Haeckel, Broadway Stores’ chief financial officer. The company has retained Merrill Lynch and Salomon Bros. to advise it on a possible sale.
Dworkin and Haeckel declined to say which companies have expressed interest in the stores, which are spread throughout the fast-growing Southwest. Some industry analysts have speculated that companies such as St. Louis-based May Department Stores--operator of Robinsons-May and other chains--may be interested.
Thomas Friedberg, an analyst at Genesis Merchant Group in San Francisco, said other logical buyers would be Minneapolis-based Dayton Hudson Corp., which operates Target and Mervyn’s, and Federated Department Stores, the Cincinnati-based operator of chains such as Macy’s, Bullock’s and Bloomingdale’s.
Friedberg said the 12 stores--operated as the Broadway Southwest division--have a real estate value of about $70 million, but he said open-market bidding could drive the price past $200 million.
“By selling Southwest, the company could create more options,” Friedberg said. “They could increase the availability of cash or reduce debt. It might give the company more time to turn things around.”
Dworkin took on the task of engineering a rebound when he joined the company in March, 1993. The retailer posted fourth-quarter earnings of $11.9 million, contrasted with a loss of $18 million for the same period a year ago.
That quarterly performance narrowed the company’s loss for the year to $37.4 million from $95.9 million the year before. The previous year’s loss was worsened by a $45-million charge for corporate restructuring and losses incurred from the Northridge earthquake in January, 1994, the final month of that fiscal year.
