Richard Baker, president of NRDC Equity Partners, knows many are expecting the group to begin selling off Lord & Taylor's real estate, now that the deal with Federated Department Stores to acquire the upscale chain has been closed. Based on Mr. Baker's public remarks, they may be disappointed.
In an interview with Women's Wear Daily, Mr. Baker said, "This is a buy-and-build situation... We want to continue to grow it through renovating stores, taking additional stores and continuing the growth that Jane [Elfers, L&T's president and chief executive officer] has put in place."
The new owner of Lord & Taylor plans to invest $150 million to renovate stores and build others in affluent suburbs in the Northeast. Not everything NRDC will do with the chain is about growth. The company has said it plans to close its store in Water Tower Place in Chicago and downsize its flagship store on Fifth Avenue in New York.
"We put together an aggressive budget to reinvest in [other] stores. We believe the consolidation within the retail industry creates a viable, long-term business opportunity for the continued growth of Lord & Taylor," said Mr. Baker.
As to how NRDC plans to spend the $150 million on renovation and new store construction, Mr. Baker said, the company would "go into every store and touch every store, touching the highest-performing stores first."
He also said there are opportunities to expand the chain's store count. "We are also open to taking additional stores in properly located markets in the Eastern corridor, certainly Connecticut, Long Island, New York, New Jersey and Pennsylvania. We are looking to be in lifestyle centers. Wouldn't it be great if Lord & Taylor located close to residential neighborhoods in upscale lifestyle centers? Jane is going to be leading us into new territory."
Mr. Baker said NRDC takes over a Lord & Taylor that is already on the upswing. "It's just been getting better and better, so we have no plans to close any other stores... When Federated started closing and rebranding stores, customers began taking that opportunity to revisit Lord & Taylor. They liked what they saw and bought things. Sales for the past month were up 10 percent, and season-to-date are up 8 percent."
Discussion Questions: Do Jane Elfers and the Lord & Taylor management team have the chain back on the right track? What will Lord & Taylor management and NRDC have to do if Richard Baker's plans for the chain are to be achieved?
Mr. Baker believes Lord & Taylor has great potential for growth in affluent counties such as Westchester, NY and Fairfield, CT. He told WWD he sees Lord & Taylor filling the pricing space between Saks and Neiman Marcus on the one side and Kohl's and J.C. Penney on the other.