Zayre Spins Off Wholesale Division, Merges With TJX; Ames Closing 77 Stores
FRAMINGHAM, Mass. (AP) _ Zayre Corp. said Monday it is spinning off its wholesale division and merging with its TJX Cos. subsidiary in a major restructuring that will end the company’s association with the 59-year-old Zayre discount store chain name.
Meanwhile, Ames Department Stores Inc., which bought 392 Zayre stores from Zayre Corp. for $800 million in September, said it would close 74 of the outlets.
Zayre said it would pay a $3.50-a-share dividend to stockholders after forming a separate company for its BJ’s Wholesale Club and HomeClub operations.
After the spinoff of the new Wholesale Clubs company, Zayre planned to merge with TJX Cos., a subsidiary of which Zayre owns 83 percent, the company said in a statement.
TJX’s minority shareholders will receive 1.35 shares of Zayre’s common stock for each share, the company said.
Zayre said it would change its name to TJX Cos. next June, ending its affiliation with the name that comes from the German and Yiddish phrase ″zehr gut,″ meaning very good, chosen by brothers Max and Morris Feldberg, who founded the company in 1929.
Zayre President Maurice Segall, who led Zayre to retail success after he was hired in 1978 but has struggled since 1986, said he would step down after the restructuring is completed, probably in the spring.
After the wholesale spinoff, TJX will consist of Hit or Miss and T.J. Maxx discount clothing chains, the Chadwick’s of Boston catalogue operations and Zayre Corp.’s remaining non-operating assets and liabilities.
Zayre spun TJX off in 1987 as a separate company from its apparel chain.
Zayre said that for the 12-month period ending Oct. 29 the TJX companies had sales of $1.82 billion. BJ’s Wholesale Club and HomeClub reported sales of $1.54 billion for the same period.
The restructuring and Ames buyout follow a two-year decline for Zayre. While Hit or Miss and T.J. Maxx have flourished, Zayre Discount reported losses of almost $70 million for the first two quarters of this year.
Ames said it would close 77 discount department stores, including 74 Zayre Stores in 14 states, after the holiday shopping season.
Rosemary Keogh O’Neill, a spokeswoman for Ames, said the 77 stores employ 7,500 to 7,700 people, two-thirds of whom are part-time. Employees will be offered transfers where possible, she said.
″Closing unprofitable stores is essential to our main task, that of returning the remaining 318 Zayre Stores to their historic level of profitablity,″ said Peter B. Hollis, Ames’ president and chief executive officer.
Also announced Monday was the appointment of Ames Executive Vice President James T. McKitrick as chairman of Zayre Stores, replacing Herbert Zarkin.
The states in which stores are to be closed are located in Alabama, Delaware, Florida, Georgia, Idaho, Illinois, Kentucky, Louisiana, New York, Massachusetts, Mississippi, Ohio, Pennsylvania, Tennessee, Vermont, Virginia and Wisconsin.