Carter Hawley Hale

Department stores

1896-1995

British-born Arthur Letts opened a tiny mart on Broadway and Fourth Street then the outskirts of Los Angeles that would evolve into the city’s biggest and most enduring department-store chain.

But after nearly a century in which Carter Hawley Hale weathered the effects of bankruptcy, recession, an earthquake and a hostile takeover attempt, it finally faded away in 1995, when the long-struggling company found a buyer in Federated Department Stores.

At the time of the buyout, the company’s stock price, which had hit $77 in the late 1980s, was in the $1 range.

“It was very simple they borrowed more money than they could pay back so they became highly leveraged,” said John Golisch, retail partner at Arthur Andersen LLP. “That put pressure on their profitability and margins and didn’t allow them to take any missteps.”

The merger with Cincinnati-based Federated was a $373.3 million stock swap and led to the closure of some stores and the conversion of others to Bullock’s, Macy’s and Bloomingdale’s. At the time, the company then known as Broadway Stores Inc. operated 52 outlets under The Broadway name, 41 of them in California and the rest in Nevada, Arizona, New Mexico and Colorado. The company also operated 21 Emporium and eight Weinstocks stores in Northern California, and one in Nevada.

Carter Hawley first started to flourish during the postwar era under company President Edward Carter, who took the helm from 1947 until 1983. Recognizing the growth of suburbs in Southern California, he matched the location of additional stores to the evolving freeway system.

By the late ’70s, the company had emerged as the nation’s sixth-largest retailer. But the flagging economy and over-saturated retail landscape made sales difficult for department stores nationwide especially in Southern California, hit hard by defense-industry cuts. To ward off a potential bid from The Limited chain, the company spent more than $1 billion to reorganize, but never fully recovered.

“Department stores were caught in a squeeze as people in the middle class economized and looked at stores like Wal-Mart, Kmart and off-price retailers like Marshalls to buy the same things for less,” said Bernard Codner, director of the Institute of Retail Management at California State University, Los Angeles.

In 1991, the debt-burdened company sought Chapter 11 protection in one of the largest California bankruptcies at the time. Carter Hawley emerged from bankruptcy in 1992 after Chicago investor Sam Zell acquired majority ownership and contributed more than $50 million in capital.

There were efforts at resuscitation by renaming the company Broadway Stores and choosing respected retail executive David Dworkin as CEO (replacing longtime CEO Philip M. Hawley). But just when it was starting to get back on its feet, the chain was tripped once again in 1994 when the Northridge earthquake damaged stores and forced the closure of locations in Sherman Oaks, Canoga Park, Northridge and Panorama City. Already in debt past the breaking point, the company began looking for a buyer.

Nola L. Sarkisian