Southland suppliers wary of Broadway sale.

It may be harder to sell to new owner Federated 

Southland manufacturers are likely to have a tougher time selling their goods to Federated Department Stores Inc. than to Broadway Stores Inc., and many could fail to make the switch altogether, sources say.

Cincinnati-based Federated announced last week it plans to acquire Los Angeles-based Broadway in a stock swap valued at $373 million. Federated would also take on Broadway's $1.3 billion debt load.

Broadway operates 83 department stores under the names Broadway, Emporium and Weinstocks. Most of these outlets are in California.

Federated already operates the Bullock's and Macy's chains in California. It is also planning to expand its Bloomingdale's chain out here, although there are currently no Bloomingdale's outlets in the state. Thus, the merger would make Federated, which already has 48 stores in California, the largest department store chain in the state.

For the hundreds, or perhaps thousands, of L.A.-based companies that have been supplying Broadway with merchandise, the merger could mean tough going, said Kevin Talbot, president of E.B.G.B., a downtown L.A.-based manufacturer of men's and women's active wear clothing.

E.B.G.B. has sold in the past to both Broadway and Federated. And, Talbot explained, Federated's rules for dealing with suppliers are much more rigid than are Broadway's.

Fewer vendors needed

In addition, Federated will buy for the new stores from fewer vendors than does Broadway, said Barbara Fields, owner and president of Barbara Fields Buying Office, a downtown L.A.-based fashion consulting service for retailers.

Federated has a very limited roster, called a matrix list, of the vendors it buys from. Suppliers have to be approved by a committee and go through a time-consuming bureaucratic process to get on that list, Talbot said.

Federated is very picky about whom it chooses and wants to be sure that dealing with each vendor will help its bottom line, Fields said. It also looks for suppliers that can offer something other suppliers can't, such as better prices, delivery terms or products, he added.

On the other hand, Broadway has no such list, Talbot said. Vendors have been known to contact Broadway's buyers, meet with them, and make a sale the next day, he said.

Broadway will "buy from anybody," and "can buy on the spot," he said.

If Broadway buyers like certain merchandise and think customers will like it, they'll buy it, he said.

Relationships count

Supplier relationships with individual buyers are also of more importance at Broadway. In comparison, suppliers must have more than one contact within Federated pulling for them or they won't get anywhere, Talbot said.

However, once suppliers land on Federated's matrix list, they're likely to sell to the retailer on a regular basis. Broadway's buying habits are a little more haphazard, he said.

As a result of Federated's tougher buying policy, though, many suppliers in L.A. County will "definitely" lose Broadway as an account and not be able to replace it with Federated, Talbot said.

Some suppliers may benefit, though, from the acquisition.

Officials at Leon Max, a Pasadena-based manufacturer of women's clothing, are excited about the acquisition because the company sells much more apparel to Federated than to Broadway, said Mark Mendelson, senior vice president at Leon Max.

Fitting the profile

"Bullock's and Bloomingdale's are very good accounts for us," he said. Those chains customers fit the profile of Leon Max's targets, he said.

On the other hand, Broadway's Beverly Center store is the only one that carries Leon Max merchandise, he said.

Also, when Federated operates two stores close together, it sometimes moves the men's and home furnishing departments into one and leaves much more space for women's clothing in the other. Federated did just that when it recently acquired an I. Magnin space directly across from a Bullock's outlet in Palm Desert, Mendelson said.

Officials at fragrance manufacturer Giorgio Beverly Hills are also pleased with the planned acquisition, said company spokeswoman Jacqueline Steinberg.

Giorgio's products are already fully distributed throughout Federated's Macy's, Bloomingdale's and Bullock's chains, as well as at Broadway outlets, she said. Giorgio officials are confident that when Federated takes over the Broadway outlets, it will extend its distribution of Giorgio's products there as well, Steinberg said.