New Owner Buys, Looks to Build Lord & Taylor
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.
No chance, not gonna do it, not gonna happen. They may have gotten a short term blip because of transition issues and consumer confusion around Macy’s takeover/transition….. but they still are [ailing] in a dying category and quick cosmetic fixes will end up to be the worst $150 million anybody ever spent. Unless and until someone is willing to reinvent and create a truly relevant and contemporary mid priced department store, customers will continue to flock away from the Lord & Taylors of the retail world.
Filling the pricing space between Saks on the one hand and Kohl’s on the other is a pretty big gap to fill, and that space is clearly targeted by Macy’s in a much bigger way. L&T needs to emerge from the May Co. shadows and continue its strategy to upgrade its offerings and price points — it seems to be working based on the early sales numbers that they report.
More importantly…how does L&T achieve more compelling service, ambience and assortments than their true competition, which is Nordstrom?
“One source said the seven-level, 141,000-square-foot store was not profitable and considered unwieldy. But Baker said he would have preferred to keep it. ‘It was doing well enough to keep,’ he observed, but said the unit would probably close in the first quarter of 2007.” WWD
Other than that bizarre remark, I like what I see. But I agree L&T needs to establish a firm identity ( i.e. something other than “not being someone else.”)
Who would talk about store closings when sales are good? Isn’t it in Lord & Taylor’s best interests to welcome real estate developers? Everyone wants to see if the sales increases can be sustained over a significant time period, say a couple of years. Furthermore, location scarcity may help Lord & Taylor, so they have to be careful that new locations don’t cannibalize existing L&T stores.
Store visits are already underway and memos and store pep talks have all been positive so far. With sales up and new owners who live in an affluent area with multiple Lord & Taylor stores within easy reach, it should all be good. Of course, things are usually good in the early days of a buyout and it’s too early to tell whether this big investment will pan out as they hope.
According to Lord & Taylor management with whom I have spoken at the Northbrook Court Store in Northbrook, Il, sales have increased quite rapidly since the Marshall Field’s has been turned into a Macy’s at the same mall.
I myself have been shopping there now as a classy alternative to an otherwise bland Macy’s, in my opinion.
Many Chicagoans are revisiting Lord & Taylor due to the fact that Marshall Field’s is gone.
I think it is good news NRDC plans to keep Lord & Taylor running. I always thought Lord & Taylor has the most upscale-looking of stores, even if it didn’t always carry upscale merchandise. At least the May Company put a lot of capital into creating sophisticated retail environments.
I was disappointed with the recent closings of the stores closest to me. I’m glad management has said it wants to open more stores on the East coast. In New England there are no L&T stores currently located between Boston and Hartford, CT. I hope it reopens the store in Holyoke, MA since it is still empty.
Lord & Taylor could also open stores again in some of the Southern markets. Maybe the reason the stores in Florida and Texas did so poorly was that there were too many of them and, as an earlier poster said, they cannibalized each other.
Does anyone know if Lord & Taylor management is trying to phase out the handwritten logo in favor of block script? I’ve noticed that recent ads feature “Lord & Taylor” in block script superimposed over a faded-out cursive logo. I hope they keep the logo; this differentiates it from the block script of Saks and Nordstrom. The way the logo is written gives it a sense of movement; one of the most successful logos in history – Coca-Cola – is also written in cursive.
My “yes” answer needs to be couched within the guidelines of selling real estate to invest in the top 6 to 10 stores, or more.
Lord & Taylor needs a facelift and target marketing to a segment of the middle income and up households that like European and designer cloths.
L&T has to differentiate itself from Saks, and if possible, Neiman-Marcus. Tough one… Hmmmmmmmmmmmmmmm
Let Lord and Taylor stay where it is for now. I think that it is doing very well in the Chicago and Detroit markets as a result of the Federated conversion to Macy’s. In the Northeast, the case is the same with Filene’s, and in the Washington area, Hechts. Lord and Taylor has some wonderfully designed stores, especially that in Westfield, New Jersey.
Lord and Taylor should never have closed in Providence Place or the Emerald Square mall in Attleboro, Massachusetts. I think L&T should re-enter markets such as those, large, upscale malls. I have looked at all the current Lord and Taylor stores, and they seem to be doing very well in the locations they are in. Take the Moorestown store. It’s the only store in south Jersey, the perfect market.
Jane Elfers is going to make Lord and Taylor a glorious store once again within the next 10 years!