After months of public speculation on the fate of its three Weinstocks stores in Utah, Weinstocks' parent company, Carter Hawley Hale Stores Inc., based in Los Angeles, said it has agreed to sell two of its Utah Weinstocks stores to the Mervyn's chain and close a third.
Under the agreement, Mervyn's will purchase the 147,000-square-foot Weinstocks in Crossroads Plaza in downtown Salt Lake City and the 197,000-square-foot store at the Fashion Place mall in Murray.A Carter Hawley spokesman said a separate agreement with Ogter Associates Limited Partnership allows the company to close the 100,000-square-foot Weinstocks store in Ogden City Mall after the holiday season.
Mervyn's currently operates three department stores in the Salt Lake area. The price Mervyn's will pay for the Weinstocks stores was not disclosed.
Carter Hawley said all three Utah Weinstocks stores will continue to operate until early next year to take advantage of the Christmas selling season.
Weinstocks employs some 600 people at the three stores. Local Weinstocks management declined to comment on the sale or speculate what it will mean to store employees.
Carter Hawley Hale Stores Inc., which has been operating under Chapter 11 bankruptcy protection, has 87 stores under the name of Weinstocks, The Broadway, The Broadway Southwest and the Emporium. It reported sales last year of $2.1 billion.
Mervyn's is a division of the Dayton Hudson Corp. It reported sales last year of $4.1 billion.
According to wire service reports, Carter Hawley Hale is scheduled to emerge from bankruptcy court next week under a reorganization plan funded by a Chicago-based investor group that will have controlling interest in the company.
Carter Hawley, the largest department store retailer in the western United States, assumed large debts in 1987 in a hostile takeover battle. It went into Chapter 11 in February 1991 following several years of cash-flow problems and a poor 1990 Christmas selling season.
Last March, Carter Hawley said it would cut administrative jobs and close its corporate headquarters in Los Angeles and its Emporium/Weinstocks headquarters in San Francisco.
Carter Hawley reported a $20.4 million loss for its first fiscal quarter ended May 2, down from a loss of $62.4 million in the same period a year earlier.
Last year, the Zell-Chilmark Fund, set up by Chicago businessman Sam Zell to invest in troubled companies, bid $258.5 million or 47 cents on the dollar for Carter Hawley's $550 million in debts to creditors and bondholders.
If Carter Hawley creditors and shareholders approve the reorganization plan, Zell-Chilmark would emerge with three-quarters ownership of the retailer. Carter Hawley said it would then spend $325 million to renovate its remaining stores.