Monday, December 11, 2006

Gottschalks For Sale?


According to Reuters, Fresno-based Gottschalks department store has hired USB Investment Bank to help it explore a sale or merger of the company.

Gottschalks is one of the very few independent family-run department stores in the country.

Department store consolidation has been in the works for decades. According to Kurt Barnard, president of Retail Forecasting consulting company, "the department store has lost much of its luster. They're struggling very hard to find an avenue that can lead [them], if not back to past glory, certainly onward to newfound success." According to TheStreet.com, department store stocks have underperformed the S&P 500's 139% rise over a period from 1994 to 2004, with Nordstrom up 128%, Saks up 73% and May Company up 47%. Meanwhile, Dillard's shares have fallen a whopping 52% in the past 10 years.

Gottschalks has just one Bay Area location (Antioch, Somersville Town Center). A second location in Danville's Blackhawk Plaza closed this year (due to being forced out by the shopping center).

Scott
Read the full story here.

8 comments:

Georob said...

Living in Fresno(not very far from Gottschalks North Fresno HQ), it's been nice to have an alternative to Macys, though my wife would argue that Gottschalks doesn't even come close. I had read that JCPenney had made an offer for Gottschalks couple of years ago. Whether they would have operated it separately or turned them all into Penneys I don't know.

Gottschalks' reluctance(or inability) to enter urban markets may have caught up with them. I think they had a big opportunity to enter the Bay Area when Federated closed all those Emporium stores years ago, and are faced now with the same scenario in LA as Federated looks to close several Robinsons-May locations. But for whatever reasons, they chose not to act then and may not now.

So then, Gottschalks must get bigger, get smaller, or sell out. They obviously can't stay put

I always thought Dillards might find Gottschalks an attractive target. Places like Sacramento and Fresno are similar to the Sunbelt markets Dillard competes well in.
Another buyer that comes to mind is Belk out of Charlotte, NC; as they are are a family owned company with many locations in small and medium sized cities.

Problem is that besides shopping malls, Gottschalks also has smaller stores at strip malls in places like Sonora, Oakhurst, and Scotts Valley. Would Dillards, Belk, or even JCPenney want to keep those stores open? And if not, how does that affect the value of the company?

This will be interesting to watch.

Anonymous said...

Have you see this "search a mall from the web site" thing? Apparently you can search every product in every store. Westfield is running it at Valley Fair and Oakridge in San Jose, CA. Go to http://www.westfield.com/valleyfair and hit the button that says product search.

Have you seen this anywhere else?

BIGMallrat said...

The largest Gottschalk's I've seen is still smaller than the smallest Macy's I've seen. I figure they can't compete in the Bay Area. I occassionally shop at Gottshalks, since they practically give things away when on sale. They carry some upscale brands, but most of the brands are mid-market. Nevertheless, their service is better than Macy's and they are a heckuva lot simplier to deal with on many levels. I'm VERY interested to see what happens.
Oh, and Anonymous, yes, I've seen the merchandise search for Eastridge mall. I didn't know Westfield was using it. It's a clever idea and I'm finding it pretty useful.
Scott

Steven Swain said...

I've never seen a Gottschalks in person, but they seem decent and I like the fact they're family-owned. It would be a shame to see them gobbled up and budget-cut out of business by some faceles investor group.

KP said...

Georob, I've seen Belk's out here in SE Virginia in strip malls. I believe there's one in Elizabeth City, NC also. So if Belk were to buy Gottschalks they'd probably keep those stores in Sonora, etc.

I've always been a Macy's fan myself. I'm happy they took over Hecht's; the stores are so much cleaner now! But back when I shopped at Vintage Faire or the two Stockton malls, I always hit Macy's or Weinstock's first. Gottschalks wasn't as nice.

Scott, Gottschalks took over the three story Weinstocks building at Vintage Faire. Macy's took the Gottschalk's space and made it into their mens and houseware store.

Anonymous said...

Gottschalk's is also in Santa Rosa, generally considered part of the Bay Area.

BIGMallrat said...

Yikes! Thanks... almost forgot about that one at Coddingtown!
Scott

Georob said...

If I were Gottschalks and wanted to go into the Bay Area, I'd try small stores in urban locations that are underserved yet still somewhat upscale. The East Bay is covered with them: Alameda, Downtown Berkeley, Emeryville, The Rockridge and Lakeshore areas of Oakland to name a few.

Those areas are dense enough niche markets for a small store to possibly make it, especially if well served by public transit. The problem with Blackhawk was that everyone there is already accustomed to going to Walnut Creek or Stoneridge.

Even a place like El Cerrito could work. When Emporium left El Cerrito Plaza ten years ago, some local residents tried to get Gottschalks to consider moving there. Problem is that the EC Plaza was in such awful shape that I'm sure Gottschalks didn't want to take the risk. But now that it's been renovated into a big box/neighborhood center, it COULD work.