Belk, Inc., one of the last remaining family-owned department stores in the country, has entered into an agreement with Saks Incorporated to purchase 47 of the company's Proffitt's and McRae's regional department stores located in 11 of the 14 Southeastern states where Belk stores currently operate.
Belk will pay $622 million for the stores, which generated a combined total sales volume last year of approximately $700 million. Upon completion of the transaction, which has been approved by the boards of directors of both companies, Belk, Inc. will operate a total of 275 stores in 14 states with an estimated annual sales volume of $3.15 billion. The transaction is scheduled to close on July 5, 2005, and is subject to regulatory review.
Belk will offer all current Proffitt's and McRae's associates employment, and will operate the Proffitt's/McRae's headquarters in Alcoa (metropolitan Knoxville), Tenn. for a transition period anticipated through September 2005. Following the transition period, corporate associates in the Alcoa headquarters will either be offered positions with Belk or will be given appropriate severance packages.
The stores to be acquired by Belk include 25 McRae's department stores located in Alabama (5), Florida (4), Louisiana (2) and Mississippi (14); and 22 Proffitt's department stores located in Alabama (1), Georgia (2), Kentucky (2), North Carolina (1), South Carolina (1), Tennessee (12), Virginia (1) and West Virginia (2). Four McRae's stores, located in Dothan, Ala. (Wiregrass Commons Mall), Gadsden, Ala., (Colonial Gadsden), Hoover, Ala. (Riverchase Galleria) and Tuscaloosa, Ala. (University Mall), were not included in the transaction.
“This transaction solidifies and strengthens our position in the South,” said Tim Belk, chairman and CEO of Charlotte, N.C.-based Belk, Inc. “Proffitt's and McRae's are an excellent geographic fit. They give us a leading position in Tennessee and Mississippi and a stronger presence in nine other states. In addition, the combination will create synergies that will improve operating efficiency.”
“Belk, Proffitt's and McRae's all share a loyal customer following and an outstanding reputation for community service that spans many years,” said Belk. “We look forward to building on these traditions.”
“We anticipate that it will take 18 months to complete the integration of these stores, which will include the opening of a new distribution center in the fall of 2006,” said Belk. “In the meanwhile, we will remain focused on our current business and ensuring that our customers' needs are met.”
