F&N Would Keep Main Store, Sells Five Others -- Tentative Deal With Gottschalks
Frederick & Nelson has struck a preliminary $30 million-plus deal with Gottschalks Inc. of Fresno, Calif., that will enable F&N to retain and operate its downtown flagship store.
Gottschalks has agreed to buy F&N stores in Southcenter and Bellevue Square along with three Spokane outlets - Northtown Mall, University City Mall (now a Lamonts store) and downtown Spokane - F&N chief operating officer David Taylor said today.
The parties still must formalize the deal which they hope to close in May, Taylor said. The sale will need approval of the U.S. Bankruptcy Court. F&N has been under Chapter 11 bankruptcy protection since last fall.
Plans call for the Seattle downtown store to be closed during the summer for remodeling, with reopening by early fall.
Taylor said F&N plans to re-establish the flagship store as the region's "premier shopping experience." Frangos, the popular candy that has been selling out in the stores almost daily since the holiday, would continue to be a part of Frederick's.
Dennis Bracy, a Frederick's spokesman, said Frederick's also is close to a deal to sell its Aurora Village property in North Seattle to another retailer. He wouldn't identify that buyer but said it already has a presence in the area. That announcement may come within the week.
Bracy said the ongoing liquidation sale at F&N will continue as scheduled through May.
It will take proceeds from that sale, several property sales, a new infusion of $5 million in capital and the Gottschalks deal to enable David Sabey to continue operating the downtown store. Sabey announced last month he had an agreement to get the extra $5 million from an unidentified source. Bracy said negotiations are in progress with the money expected to be available within two weeks.
The company also will have to sell its distribution center at Southcenter, its garage and parking area across Sixth Avenue from the downtown store, and a new lease for the downtown store will have to be negotiated with building and property owner, the DE Corp., Bracy said.
It's too early to say what merchandising changes might be made in the downtown store, Bracy said.
Taylor said that while F&N would have liked to have kept all of its stores, the primary goal is to return F&N to its historic role as a viable business and an important part of the region. "This agreement (with Gottschalks) is an important step in doing that," Taylor said.
Gottschalks, which opened its first outlet in Washington earlier this month in a former F&N store in Tacoma's Lakewood Mall, has been particularly interested in the Bellevue Square, but has said it believes the downtown Seattle store is too large for its style.
Several other retailers - Macy's, Saks Fifth Avenue, Mervyn's and The Bon Marche - also have expressed interest in the Bellevue Square store. Kemper Freeman, Bellevue Square owner, has been cool to the prospect of Gottschalks taking over the two stores F&N has in his complex, saying it is not upscale enough to fill that niche.
What is uncertain is how the F&N space in the square might be used.
Something has to happen quickly. Other stores in the area around Frederick's at Belleuve Square - and other shopping centers - are complaining that they are losing business because of the F&N liquidation.
Freeman couldn't be reached for comment this morning but he has said the store might be leased in pieces. The 200,000-square-foot property is already split into two sections, separated by a corridor.
"I think it will be hard to find a user that will use all of the space," he said.
Bracy said F&N lawyers believe the lease allows the store to sell the Bellevue Square sites to Gottschalks.
Joseph Levy, chairman of Gottschalks, said today the new store locations in Washington will be a key step in his company's plan to establish a strong presence in the Pacific Northwest. He also plans to the close the stores he is buying for remodeling and restocking during the summer.
Levy said his company plans to hire as many F&N employees as possible. About half of those hired at Tacoma were former F&N workers, Bracy said.
Workers at the downtown store will be let go as the liquidation sale winds down. Many are expected to be rehired later, if the plan goes through.
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