Lamonts' demise no real surprise

Lamonts Apparel's announcement that it has agreed to be bought by Gottschalks, a California department-store chain, was like learning of the death of a dear relative who had been terminally ill for a long, long time.

As much as Lamonts has been a part of the Northwest's retail landscape, its survival as an independently owned department-store chain has been in doubt for at least five years and perhaps since a decade ago, when it launched what turned out to be an ill-timed expansion that put the company so far in debt it never quite recovered.

What Fresno-based Gottschalks plans to do with the existing Lamonts stores isn't clear. The 115 employees in Lamonts' corporate office in Kirkland have been told they will be paid through June 24, then lose their jobs.

Gottschalks' $19 million cash offer, which must be approved in federal bankruptcy court, includes purchasing the leases of all 38 Lamonts stores in Washington, Alaska, Idaho, Oregon and Utah. The 1,500 employees in those stores have been told Gottschalks intends to retain them and keep the stores open.

Industry analysts are divided over the deal. On the one hand, they say, Lamonts will allow Gottschalks to expand into new areas. But they say Gottschalks also faces some of the same problems that brought down Lamonts, mainly undercapitalization at a time of increased competition.

Gottschalks executives would not say if the Lamonts name will be retained. But if it disappears from the shopping landscape, the only Lamont left will be M. Lamont Bean, the clothing chain's founder and namesake. He is the son of Monte Bean, who in the late 1940s began building what would become a vast retail empire that for a time included stores specializing in auto supplies, sporting goods, prescription drugs, hardware, and lawn and garden equipment.

Lamonts, Ernst Home Centers, Schuck's Auto Supply, Fair Lanes bowling centers, Sports-West, Yard Birds and three general merchandising stores in rural Washington all were once part of retail giant Pay'n Save, which Monte Bean founded when he purchased a drugstore in downtown Seattle in 1947.

Burien birthplace

Lamonts Apparel was added in 1967 when Lamont Bean bought a clothing store named Bells of Burien.

All of the Bean stores, at one time or another, became fixtures in neighborhood shopping centers.

One of Pay'n Save's marketing concepts was to control those properties, and it was not unusual to find centers that housed Lamonts, Ernst, Schucks and Sports-West - which turned out not to be a good thing when some of the larger entities started going broke.

In retrospect, the end began in the mid-1980s when Pay'n Save acquired Schuck's.

In the deal, two of Schuck's top executives, Stuart Sloan and Samuel Stroum, acquired more than 18 percent of Pay'n Save's stock.

High cost of power struggle

A struggle within the company ensued, and Lamont Bean, Pay'n Save's chairman, turned to two New York investors and a California investor for help. It took $361 million to buy out Sloan and Stroum and return the company to private control.

The deal, which involved the sale of junk bonds, eventually ripped apart the retailing empire the Beans had assembled. In spring 1992, Pay'n Save, once the largest home-grown drugstore chain in the state, was sold to Pay Less Drugs.

In January 1997, Ernst, which had been in business 103 years, shut its doors, closing 79 stores in five states.

Jeff Atkin, a retail analyst at Kunath, Karren Rinne & Atkin, said the Pay'n Save empire grew and prospered during a time of very limited outside competition.

He said the companies were killed by the arrival of broad and unexpectedly tough competition at a time when Pay'n Save was leveraged to the hilt.

"Lamonts was always heavily leveraged," said Atkin. "It never had the capital to compete against the department stores and discount stores."

Ahead of its time

Retail consultant Richard Outcalt of Outcalt & Johnson said Lamont Bean put together a great retail conglomerate, not unlike Costco, that was probably ahead of its time.

Outcalt said Pay'n Save's empire was destroyed by its rapid growth coupled with its top executives' inability to consolidate and control costs.

"They grew so fast they outgrew their balance sheet and their ability to finance that growth," Outcalt said. "That forced them to acquire more debt."

As for Lamonts Apparel, J'Amy Owens of The Retail Group called it a "tweener store," caught between high-end department stores and discount stores such as Target and Old Navy that are doing a better job of marketing their merchandise.

"The low end has so much improved," she said. "Stores like Old Navy ask why can't the low end be fashionable and hip? They make Lamonts pale by comparison. They didn't keep up with trends or marketing. Good management is all that's kept a very troubled brand alive for a long time."

In 1984, Lamont Bean surrendered considerable control of Pay'n Save to his new partners, who shortly thereafter began forcing the sale of some of its companies. By 1986, the company was being run by William Zimmerman, a California retailer.

In recent years, Bean's time has been spent managing his family's investments from an office in Pioneer Square and presiding over the board of the Frye Art Museum, from which he retired in January.

Political contributor

He has been a frequent contributor to conservative political causes. Two years ago, he gave $5,000 in support of voter-passed Initiative 200, which ended government race and gender preferences.

While Lamont Bean's name remains on the stores he once owned, analysts think it will disappear soon.

"People stopped seeing Lamonts' name," said Owens. "Just taking the name off those buildings and putting the Gottschalks' name up will create a little interest. For that, alone, they're better off."

Robert T. Nelson's phone number is 206-464-2996. His e-mail address is rnelson@seattletimes.com.

Special Material

A NORTHWEST RETAIL FIXTURE will soon be in the hands of a California chain, but the final chapter of Lamonts was predictable given the company's bad timing and deepening debt in the past decade.