Another hallowed Northwest retailing name, Pay'n Save, will slip into history this year under terms of an agreement announced yesterday to sell the chain to Pay Less Drugs.
About 375 employees at Pay'n Save's West Seattle headquarters will be laid off at the end of July. Pay Less said it expects to continue operating Pay'n Save's 124 regional stores, including 95 in Washington with 3,500 employees. But the stores will be renamed Pay Less.
"We're buying them (the stores) to operate them," said Karen Sheridan, a spokeswoman for the Wilsonville, Ore., chain. Pay Less now operates 59 stores employing 2,023 people in Washington.
Terms of the sale were not disclosed, but the deal was part of a $275 million overall sale by Pacific Enterprises, a Los Angeles-based holding company of Thrifty Corp. and its 620 drugstores based mostly in California. Thrifty Corp., which also owns Bi-Mart, Big 5 and two other sporting-goods chains, acquired Pay'n Save in 1988.
"It is my belief that most of you will find . . . challenging and rewarding careers with Pay Less," Pay'n Save President Rick Dortch wrote in a letter to Pay'n Save employees distributed yesterday.
But he said for headquarters employees, including those in personnel, marketing and advertising, accounting and financial and executive positions, "there will not be positions available within Pay Less."
Terms of the agreement are expected to be completed by mid-summer. Employees at the headquarters will be retained until the end of July, a spokeswoman said.
Pay'n Save's distribution center in Auburn will remain open and its 250 employees retained, Sheridan said.
Founded in 1947 by Monte Bean, a prominent business leader and then Tradewell grocery-store president, Pay'n Save built a reputation through the 1950s and 1960s for quality merchandise, efficient service and no-questions-asked guarantees. By the early 1980s, Bean had built his company into the area's largest retailer - and one of the largest in the West - encompassing Ernst, Bi-Mart, Lamont's, Schuck's and Yard Birds.
In the money-trading 1980s, however, the Pay'n Save empire began to crumble. Growing competition from supermarkets, direct marketers, generic drug sellers, alternative health and medicine outlets and other market forces chipped away at its customer base.
In 1984, New York investors Julius and Eddie Trump (unrelated to real-estate magnate Donald Trump) gained control of Pay'n Save in a tumultuous leveraged buyout.
Four years later, as the chain reeled from three consecutive years of huge losses, it was sold to Pacific Enterprises in a stock swap valued at $234 million.
Under Dortch's guidance, Pay'n Save had begun a turnaround, with the past eight months' performance exceeding corporate expectations. But a sale of the chain had been rumored for several months, and last week's announcement of a $28 million first-quarter retailing operating loss by Pacific Enterprises as well as a $475 million charge against earnings fueled speculation that a deal was near.