You can’t keep a good rumor down.
The possibility of Macy’s opening in Jacksonville has again surfaced, continued not only to be fueled by its local television advertising but because of Belk Inc.
Charlotte, N.C.-based Belk hired investment bank Goldman Sachs Group Inc. to help evaluate strategic alternatives, including a potential sale. Reuters broke the story in early April.
That has ignited speculation that Macy’s could open in Jacksonville through a purchase of Belk or possibly only its five Northeast Florida stores.
It could be a long shot, but it’s not outside the realm of possibility.
Reuters reported major department stores, such as Macy’s Inc. and Nordstrom Inc., as well as large private equity firms, are expected to be contacted by Belk to solicit their interest in a deal.
Belk, a private, family-owned company, issued a statement it was starting a scheduled five-year planning process within the rapidly changing retail industry, was coming off of a successful fourth quarter in a strong financial position and was enthusiastic about the future.
“We also believe, however, that we have an obligation to consider whether there are alternatives to our current plans that would provide a better return for our stockholders,” Belk’s statement said. A Belk spokeswoman re-issued the statement Thursday and said there was no further update.
Here’s where the door cracks open for Jacksonville.
As part of its due diligence, Belk engaged Goldman Sachs to help identify all its options and said it expected to conclude the analysis within several months. “All options” raises the question whether Belk would divide its holdings and sell stores to different buyers, such as selling the Jacksonville area stores as one package.
Goldman Sachs declined comment Thursday.
Analysts say it doesn’t make sense for Macy’s, or Seattle-based Nordstrom or other department store competitors, to bid for Belk for several reasons. One is that retailers are trying to branch out of the traditional business of operating large department stores. Consumers are turning to online shopping, which raises questions about the need for more department stores, and there also is more competition from smaller retailers. Also, some department stores are choosing to open smaller or discount versions of their brands.
There’s also the overlap, raising the question how or why a company would absorb duplicative stores in its existing markets.
On the other hand, analyst Oliver Chen with the Cowen and Company investment group, said Thursday that industry consolidation is a trend as distribution and inventory management becomes more important with online shopping. So does leverage with suppliers.
“From that angle, the strategic landscape could continue to see consolidation of bigger players buying smaller players,” he said.
Macy’s reported annual sales of $28.1 billion while Belk’s sales were $4.1 billion for the year that ended Jan. 31.
Macy’s, with corporate offices in Cincinnati and New York, operates about 885 stores in 45 states, the District of Columbia, Guam and Puerto Rico under the names of Macy’s, Bloomingdale’s, Bloomingdale’s Outlet and Bluemercury.
Belk operates 297 stores in 16 Southern states. Macy’s has 243 Macy’s stores, not counting its Bloomingdale’s brand, in those states.
If Macy’s bought all of those stores, it would more than double its portfolio of Southeastern stores and decide which to keep, a potentially expensive decision.
In Florida, Macy’s operates 61 stores, five Bloomingdale’s and three Bloomingdale’s Outlets. Belk operates 25 stores throughout Florida, with at least six in the same cities as Macy’s and a few in the same mall.
That’s where the speculation is driven home.
The only major Florida city without a Macy’s remains Jacksonville, where Belk has five area stores: Atlantic North, Roosevelt Square, The Avenues mall, the Orange Park Mall and the Ponce de Leon Mall in St. Augustine.
For now, Macy’s has no stated intentions to come to Jacksonville, even though it regularly advertises in the area television market. The stores nearest Jacksonville are in Gainesville, Daytona Beach, Ocala and Sanford.
Melissa Goff, vice president of media relations and cause marketing for Macy’s, said by email Thursday the company does not comment on rumors, “nor on where we may or may not be looking for store locations.”
St. Johns Town Center developers initially hinted the center eventually would feature the likes of a Macy’s, although it is anchored by Dillard’s and the area’s only Nordstrom.
St. Johns Town Center Mall Manager Valerie Beaubrun said Thursday by email management continues to focus on the new stores that opened with Nordstrom, but also said there was always room to evolve and enhance the center as Jacksonville continues to grow.
There’s another factor that piques interest. St. Johns Town Center is 50 percent owned by Simon Property Group. The Avenues and Orange Park malls are both Simon Malls, and Belk operates in each. That would establish a local Simon connection for Macy’s if it took over those Belk stores.
Franklin Street Regional Managing Partner Carrie Smith said Thursday she hadn’t heard about the possible acquisition of Belk’s Northeast Florida stores by Macy’s. Franklin Street is a real estate services company.
Smith said for Macy’s to take those Northeast Florida locations as a way to enter the market “would be the most seamless play for them to do.”
Until Belk is sold, which some analysts predict will be to a private equity firm, nothing’s certain.
For now, what seems certain about Macy’s coming to Jacksonville is the continued speculation. And those TV ads.