As Woodward/Lothrop starts to plan its 100th birthday celebration in 1980 a question asked by many Washingtonians and investors in the department store company is whether Woodies will remain an independent regional chain when the birthday cake is cut.
The list of major American department store business not owned by a national chain has been reduced dramatically in recent years. Rich's of Atlanta has been taken over by Federal Department Stores, owner of Bloomingdale's and I. Magnin. Thalhimer's of Richmond was acquired last month by Carter Hawley Hale, owner of Neiman-Marcus.
When Gamble-Skogmo Inc. recently acquired a significant investment in Washington based Garfinckel, Brooks Brothers Miller & Rhoads, area stockbrokers noted that Woodies stock moved higher on the over-the-counter market.
Investors seemed to be saying with their money: If Garfinckel is ripe for a potential takeover, could Woodies be far behind? From a yearly low of about $23 a share, Woodies climbed recently to $32 a share and closed unchanged yesterday at $31.75.
Actually, the management at Garfinckel, Brooks Brothers is seeking to block the inroads made by Minneapolis-based Gamble-Skogmo, which owned 13 percent of the Washington company's stock on Sept. 13 and is seeking to buy up to 20 percent as an investment.
And Woodward/Lothrop has help discussions in the past about a possible acquisition or merger involving other companies but "no one of substance has approached us" who could meet the requirements of Woodies' management, Chairman Edwin Hoffman said in an interview yesterday.
Still, Hoffman said there is "no way" he can rule out a future merger or takeover if the right partner comes along.
Now sporting 14 stores, with the recent openings of a branch in Gaithersburg's Lakeforest Mall, Woodies is the dominant department store retailer in metropolitan Washington and second in area general merchandise sales only to the top-ranked national mass retailer, Sears, Roebuck & Co.
Moreover, Woodward/lothrop is the most profitable of 16 U.S. leading store companies surveyed annually by Harris Trust Savings Bank of Chicago. In the fiscal year ended last January, Woodies' profits totaled 4.6 percent of sales (ahead of Federated and Mercantile Stores Co., each with 4 percent), and operating profits (before interest expense, other income and taxes) were 10.7 percent of sales (Federated was second at 8.3 percent).
Such statistics add up to a considerable attraction for other companies because Woodies obviously knows how to make money.
At the same time Hoffman said yesterday, the strength of Woodward Lathrop profitability is also the best defense against an unwelcome takeover or merger. "We want to be one of the highest-profit stores in America," Hoffman added.
A potential suitor for Woodies would have to make an offer that "could meet our goals" of providing future security for stockholders, employes and the Washington community, the retailer said. And no such offer has been made.
In the meantime, Hoffman said his firm will continue to emphasize, "dayin and day out," that high profitability enables Woodies to hire the most qualified people, to build the stores and to expand its share of the area retail market so that current strength will not be sapped.
Part of this approach includes a two-day meeting in the near future for 17 top executives of the firm in Williamsburg to map strategy into the early 1980s.
Although Hoffman was reluctant to spell out specific plans until the meeting is concluded, he detailed some current and future developments as follows:
By 1984, he expects the new store in Gaithersbury to be the company's second-largest branch store, in terms of annual sales, behind the one at Tysons Corner Center. The Lakeforest store is "merchandise-oriented," with a decor designed "not to overwhelm" the men's, women's and children's clothing and accessories that are featured.
A 15th store is scheduled to open in mid-1980 at the new Fair Oaks mall in Northern Virginia. The Fairfax retail complex, at the intersection of Interstate 67 and Rte. 50, will be developed by the Taubman Co., the same shopping center builder who constructed Lakeforest.
Expansion plans through 1986 "are pretty well set," and Woodies is "very carefully looking at" the Baltimore area market. Woodward/Lothrop now has stores in Columbia and Annapolis and would need two major stores in large malls to make full entry into the Baltimore market feasible, Hoffman said. Another likely area for expansion is the Insterstate-95 corridor between Washington and Federicksburg, he indicated.
Woodies "will take a deep breath" in 1979 after capital outlays of some $21 million this year to open the 160,000-square-foot Gaithersburg store and to remodel existing branches as well as the downtown flagship. With new-looking stores at 7 Corners, Wheaton Plaza, Chevy Chase and downtown D.C., Woodies' immediate goal for 1979 is to increase its share of the local market, Hoffman stated.
The current fiscal year will be "good" for Woodies, with profits advancing despite only modest sales gains that reflect the impact of heavy, remodeling and subway construction as well as new stores in the area. In the first six months ended June 6, sales were up 4.3 percent to $113.8 million, while profits rose 7 percent to $3.28 million ($1.35 a share). Second quarter profits were up 27 percent.
Woodies is looking at the important selling season between now and Christmas with some caution, but Hoffman said he is not so pessimistic about retail sales in this market as some retailers are elsewhere "Continuing inflation and a lackluster economy without any real guidance" are eroding consumer confidence Hoffman stated.
Despite some pessimism, September has been a good month to date. Sportswear, shoes and accessories are among the best-selling items, and "dresses have come back beautifully."
The level of internal and shoplifting theft at Woodies declined, for the first time since 1966, in the most recent year and in the first half of 1978, which Hoffman attributed primarily to his company's own security operations under an excutive vice president.