he new owners of Garfinckel, Brooks Brothers, Miller & Rhoads--Washington's largest general merchandise retailer--are planning some major changes in corporate organization but few shifts in long-term business strategy.
Allied Stores Corp., a retail conglomerate that expects to complete its acquisition of the Garfinckel corporation at a stockholders meeting on Nov. 10, also is continuing to hold out an olive branch to David R. Waters, the outspoken chairman of the D.C. company who used unusually strong language to denounce Allied when a surprise takeover bid was launched in mid-August.
Thomas M. Macioce, Allied's chairman, said today that a previously planned expansion of the Garfinckel specialty stores outside of the Washington-Baltimore market to such areas as Florida would continue, as would gradual growth of the Brooks Brothers men's specialty stores, Ann Taylor women's fashion shops and other stores.
Macioce said in an interview that the key shift in immediate Garfinckel planning would affect the Richmond-based Miller & Rhoads department stores. This division, with 22 stores in Virginia and North Carolina, basically is unprofitable at the moment, and Allied's bid for the whole Garfinckel corporation came in the wake of talks by Allied on a possible acquisition of the Miller & Rhoads division.
Macioce said today that Allied's first priority after it begins operating the Garfinckel company will be to focus on upgrading the existing Miller & Rhoads stores. Expansion plans for that division will be junked, and all available funds will be applied to modernization and improved fashion offerings at the department stores.
Another shift planned by Allied is dividing the Garfinckel business into two divisions for department stores and specialty shops, each reporting to a separate Garfinckel officer who will report to different Allied executives responsible for these business lines.
Commenting on the current Garfinckel management and their existing business plans, Macioce said that overall "they can do what they're doing . . . but the Miller & Rhoads division will get our closest attention first." He emphasized that Allied plans to keep all existing Garfinckel divisions and that none are for sale.
He also provided for the first time some details on the bitter fight that broke out between his firm and the Washington company when the unusual retail takeover bid was started. He conceded that Allied's decision to go after Miller & Rhoads' parent company instead of its one division was "an abrupt shift" in plans that no doubt came as a real surprise to the Garfinckel management. But he conceded that he had had his eye on the Garfinckel corporation for a year and a half, after hearing it would be a good buy.
"I sat down in front of a mirror and said, 'Here's a profitable company that is a takeover target and we're taking over the unprofitable business . . . why only that'?" Macioce recalled. So he decided to seek the bigger goal and got the approval of his full board before the surprise bid for Garfinckel stock at $48 a share on the morning of Aug. 14.
After trying all possible means of stopping Allied--including bitter verbal rhetoric--Garfinckel directors finally approved a sweetened Allied offer of $53 a share in early September. The $235 million purchase is being financed on an interim basis with existing bank credit lines and Allied cash, but Macioce said that when financial markets permit, a long-term debt issue would be offered to finance the transaction.
Officers of the Garfinckel company will continue to supervise the nationwide business from Washington offices, although some positions could be relocated to Allied headquarters here in the next several years, and Allied may move some of its executive staff--such as those dealing with government relations--to Washington, Macioce stated.
On the sensitive issue of Garfinckel Chairman Waters, Macioce said it's up to the Washington businessman to decide what he will do after Nov. 10. "He has a contract through 1987 . . . we continue to operate under that contract," he said.
According to Macioce, he and Waters talk on the telephone virtually every day, and relations are amicable .