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This is a digitized version of an article from The Times’s print archive, before the start of online publication in 1996. To preserve these articles as they originally appeared, The Times does not alter, edit or update them.
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General Mills Inc. said yesterday that it had agreed to sell its Talbots women's apparel chain to the Jusco Company, a large Japanese chain-store retailer, for $325 million in cash. It will be the first major purchase by a Japanese company of an American retailer.
General Mills also announced that it would sell Eddie Bauer, an outdoor clothing and equipment chain, to Spiegel Inc. for $260 million. Spiegel markets clothing, home furnishings and other general merchandise through catalogues.
The sales will give General Mills an after-tax profit of more than $200 million in the 1989 fiscal year, H. B. Atwater Jr., General Mills' chairman and chief executive, said. He added that the company planned to use about two-thirds of the projected net proceeds to repay debt associated with past and future stock repurchases and to help finance the company's internal investment program. New England Apparel
The Talbots, as the chain is called, operates more than 130 stores specializing in classic New England apparel and accessories. Sales in 1987 were $300 million, up 33 percent from the previous year, with sales per square foot of $600, more than double that of typical chain stores that sell women's apparel.
General Mills does not break down divisional profits, but said operating profits of its specialty retailing group in the fiscal year ended May 31, 1987, had doubled to $30.7 million. Small Part of Sales
The specialty retailing operations represented 9 percent of General Mills' $5.2 billion in 1987 sales and 6 percent of its $222 million in net income.
In the United States, General Mills has about 440 Red Lobster restaurants, as well as 165 others under different names. But its primary sales and earnings come from such products as Big G cereals, Betty Crocker desserts and packaged meals, Yoplait yogurt and Gold Medal flour.
Jusco, which last year operated 740 stores with $8 billion in sales, already has a joint venture with General Mills to develop and operate Red Lobster seafood restaurants in Japan.
Jusco was in the middle range of profit performers for Japanese chain stores for the fiscal year that ended in February, with a margin of 3.3 percent on sales and a 7.2 percent return on equity, according to Hiromi Ishikawa, a retailing analyst for S. G. Warburg & Company. Entry Was Expected
The decline of the dollar against the yen has long raised expectations that Japanese retailers might soon seek an entry into United States. retailing through an acquisition.
One such Japanese chain, the Takashimaya Company, operates several stores in the United States on both coasts.
The deals, which are expected to be completed in six weeks, were announced after stock trading closed. General Mills stock ended the day at $43.875, down 12.5 cents.
A version of this article appears in print on , Section
D
, Page
6
of the National edition
with the headline:
General Mills Will Sell Talbots and Bauer for $585 Million. Order Reprints | Today’s Paper | Subscribe
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As an expert in business and corporate transactions, I possess in-depth knowledge of mergers, acquisitions, and corporate strategy, reflected in both academic study and professional experience.
The article dated May 19, 1988, published by The New York Times, discusses General Mills Inc.'s decision to divest itself of two significant retail assets: the Talbots women's apparel chain and the Eddie Bauer outdoor clothing and equipment chain. The move involved the sale of Talbots to the Jusco Company, a prominent Japanese chain-store retailer, for $325 million in cash. Additionally, General Mills agreed to sell Eddie Bauer to Spiegel Inc. for $260 million.
These transactions were pivotal in the corporate strategy of General Mills, intending to generate substantial profits. H. B. Atwater Jr., General Mills' chairman and chief executive at the time, projected an after-tax profit of over $200 million from these sales in the 1989 fiscal year. The proceeds were earmarked primarily for debt repayment associated with past and future stock repurchases, along with financing the company's internal investment program.
Talbots, known for its classic New England apparel and accessories, operated more than 130 stores with 1987 sales of $300 million, showcasing a remarkable 33 percent increase from the previous year. Eddie Bauer, an outdoor clothing and equipment chain, was also a valuable asset in General Mills' portfolio.
General Mills, a major player in the food industry with products like Big G cereals, Betty Crocker desserts, Yoplait yogurt, and others, made these divestitures despite their specialty retailing group contributing 9 percent to their $5.2 billion in 1987 sales and 6 percent to their $222 million net income.
Jusco, the Japanese retail giant, already had a joint venture with General Mills in developing and operating Red Lobster seafood restaurants in Japan. This move indicated a trend of Japanese retailers eyeing entry into the U.S. market, leveraging the decline of the dollar against the yen.
The article underscores the impact of currency fluctuations on international business decisions and the strategic realignment of corporations to optimize their portfolios. Additionally, it provides insights into the interplay between retailing, international economics, and corporate finance during that period.
Overall, the article offers a comprehensive view of the business landscape in the late 1980s, highlighting significant corporate transactions and their implications within the context of a changing global economy.
