Liberty House
to be Macy’s

Federated announces it will
take over all of the
isle retailer's stores

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By Tim Ruel truel@starbulletin.com
and Russ Lynch rlynch@starbulletin.com

Federated Dept. Stores Inc. announced today it will buy all of Liberty House and change the kamaaina retailer's name to the Macy's brand.

Federated will take over 11 department stores and seven resort and specialty stores in Hawaii, and one department store in Guam.

After the purchase concludes in mid-July, Liberty House will become part of the Macy's West Division and will ultimately change its name to Macy's, officials said today.

The terms of the deal were not disclosed.

"Federated is buying the entire company and all of its assets," Jerry Sullivan, chairman of Macy's West said at a news conference in the Liberty House store in Ala Moana Center. "We are not closing any stores, with the exception of a small specialty shop at the marketplace on Kauai. The three employees at that store will be offered jobs at the Kukui Grove store."

All Liberty House employees will be interviewed for possible employment with Macy's in Hawaii, Sullivan said, but a number of senior management, administrative and back office jobs likely will be lost because Macy's already handles those functions on the mainland.

Included in the departures will be John Monahan, the Liberty House president and director who guided the company through its bankruptcy.

Sullivan also said a number of mainland Macy's positions have been held open and some of those affected may find jobs there.

"The stores will ultimately be Macy's stores," Sullivan said. "We believe in the value of the Macy's name, but at the same time we are sensitive to the Liberty House tradition. We are evaluating options and hope to use the Liberty House name in some way."

Local retail analysts have predicted a deal between the two companies for months.

Cincinnati-based Federated, which operates 432 retail stores in 33 states and Puerto Rico, is the owner of the Macy's West Division, as well as the Bon Marche, Burdines and Bloomingdale's retail chains.

Liberty House Founded: 1849 as Hackfeld's Dry Goods in Honolulu. Became H. Hackfeld & Co. in 1898. Renamed Liberty House in 1918. Opened flagship Ala Moana store in 1966 Headquarters: Honolulu Owners: Oaktree Capital Management and DDJ Capital Management Stores: Seven on Oahu, one each Maui, Kauai, Kona, Hilo, Guam plus seven specialty shops in tourist locations Employees: About 3,000 Financials: Profit of $8.9 million in 2000 on sales of $289 million Federated Department Stores Inc. Founded: 1929, but its stores date back to 1830 Headquarters: Cincinnati, Ohio Stores: 432 in 33 states and Puerto Rico Employees: 129,000 Store brands: Bloomingdale's, the Bon Marche, Burdines, Goldsmith's, Lazarus, Macy's, Rich's Internet sales: www.bloomingdales.com, www.macys.com Financials: Loss of $184 million in 2000 on sales of $18.4 billion

Macy's West is Federated's largest chain with 117 stores in Arizona, California, Minnesota, Nevada, New Mexico and Texas. Once associated with New York, Macy's moved West in 1945 when it bought O'Connor Moffat and Co. in San Francisco.

In 1995, Federated bought Los Angeles-based Broadway Stores Inc. in a deal estimated at $800 million. Half the 82 stores sold were converted to the Macy's name in 1996.

Liberty House emerged from its three-year Chapter 11 bankruptcy reorganization in March.

Founded in Hawaii in 1851, Liberty House is currently owned by two mainland "vulture capital" firms that bought up the company's debt during the bankruptcy.

The company is still one of Hawaii's largest companies, with 3,000 employees.

It is not clear how the sale of stores would affect the payments that Liberty House is supposed to make to some 500 local vendors, who were owed more than $5,000 before the company filed bankruptcy. The vendors had received a five-year note for half of their individual claims.

In March, Liberty House paid a total of $7.5 million, in cash, primarily to the 1,100 vendors owed $5,000 or less each.

In 1997, Federated had reportedly entered talks to buy some Liberty House stores, but the negotiations ceased a few months before Liberty House was forced into bankruptcy in March 1998.

In 1990, Federated itself filed bankruptcy, the result of a highly leveraged corporate takeover by the Campeau Corp. Federated emerged as a new publicly traded company in February 1992, with 220 department stores in 26 states.

Federated was formed as a holding company in 1929 in Columbus, Ohio, by several family-owned department stores including Abraham & Straus, F&R Lazarus and Filene's of Boston.