THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Monday, April 29, 1996 TAG: 9604270245
SECTION: BUSINESS WEEKLY PAGE: 04 EDITION: FINAL
SOURCE: BY MEGAN SCHNABEL, ROANOKE TIMES
LENGTH: Long : 111 lines
Seems as though everybody - except members of the Leggett family itself - is talking about rumblings inside the department store company of the same name.
Robert Leggett, the chain's president, CEO and - in title, anyway - spokesman, hasn't returned phone calls since he first confirmed, more than a month ago, that his company had received a buyout offer from an unnamed ``major retailer.''
And other executives named Leggett have referred all calls back to Robert Leggett.
``They are a very private company and you cannot get any information on them,'' said Kenneth Gassman, a retail analyst with Davenport & Co. of Virginia in Richmond.
Few people know anything about internal workings of the ``intensely private'' Leggett, said Murray Forseter, editor of Chain Store Age Executive, a trade magazine based in New York.
The few people who do have some insight into the company would talk, but only anonymously.
The initial clue that something was brewing at Leggett came, not unexpectedly, from someone outside the organization.
In early March, R. Brad Martin, chairman and CEO of the Alcoa, Tenn.-based Proffitt's Inc., mentioned during a visit to that chain's Richmond stores that his company wanted to enlarge its Virginia presence - and would consider buying a company such as the 37-store Leggett.
Since that comment Proffitt's will neither confirm nor deny that it has been in negotiations with Leggett.
Robert Leggett's statement was issued in response to media queries about the status of his company.
Many industry observers believe that Proffitt's is the most likely candidate as the mystery suitor.
The offer - whomever it came from - may have been enough to stir the pot at Leggett's headquarters in South Boston, Gassman said, and prompt the family to look at its alternatives:
Selling all or part of the company to the mystery suitor, possibly Proffitt's, or some other chain.
Selling to its sister company Belk, a chain based in Charlotte, N.C., that shares buying and accounting services.
Going public.
Doing nothing.
John Belk, chairman of Belk Store Services in Charlotte, confirmed recently that the Belk organization, is, indeed, interested in dealing with Leggett.
Leggett has strong ties to the Belk company, which it split from in 1927. Belk, which operates more than 200 stores in the Southeast, still owns an undisclosed percentage of Leggett stock, and Belk and Leggett family members sit on the boards of each other's corporations.
But neither company will say who approached whom in this deal.
Is Belk the ``major retailer'' that wrote a letter to Leggett, or did Leggett ask Belk to step in?
Still another possibility is that Belk's intervention is a response to the mystery suitor's request, an attempt to stave off takeover by an entity outside the two families.
The way Leggett is organized could make it difficult for any company to purchase it wholesale, Gassman said. In effect, Leggett is more of a confederation than a corporation.
Years ago, each Leggett store was set up as its own corporation, with separate boards of directors and shareholders. The boards usually overlapped among the corporations; there are, after all, only so many Leggetts - people, that is - out there.
Because of this arrangement, outsiders often don't really know who's in charge at Leggett. Right now, Robert Leggett is president and CEO and speaks for the Leggett organization as a whole.
But leadership of the company rotates among the family members every few years.
Two people close to the Leggetts believe there is a schism within the family, with Robert Leggett's faction wishing to sell the company and the other bloc wanting to hold on to some stores.
These sources say T.C. Leggett, who started the company's outlet centers in the early 1990s, wants to keep at least those six stores.
And they believe he may be backed by Fred Leggett Jr., who resigned in early March as CEO after a failed bid for re-election to the board of directors of Leggett Stores Inc. He had been elected to the position of board chairman and CEO in December 1994.
The roots of Leggett's current dilemma may reach back to 1990, when retailing powerhouse May Department Stores Co. of St. Louis bought four Miller & Rhoads stores, two each in Richmond and Hampton Roads, and the Thalhimers chain.
May, which reported 1995 sales of $12.23 billion, likely presented a more powerful competitor than Leggett ever had run up against, thinks a Virginia retailer, who wished to remain unnamed.
So Leggett changed under the pressure of competition. For example, once an outspoken opponent of the repeal of the state Blue Law, Leggett opened on Sundays.
The company centralized its purchasing at the South Boston office, after decades of allowing each store to do its own buying of inventory. It began consolidating its stores into fewer and fewer separate corporations.
The Belk and Leggett employees know little more about the company's future than outsiders. In fact, a woman who works for Belk in North Carolina called the Roanoke Times a few weeks ago, wondering whether anyone here knew what her employer was doing and whether she needed to worry about her job.
Roanoke employees aren't in any better shape. They know Leggett has received a buyout offer, but they don't know from whom, and they don't know when, if anything, an announcement about their jobs will be made.
They'll likely have to wait a while to hear anything, Gassman thinks.
``This family doesn't move fast on anything it does,'' he said. by CNB