May Co. Agrees to Sell Its Loehmann’s Off-Price Chain

ST. LOUIS — May Department Stores Co. agreed Friday to sell its Loehmann’s off-price women’s apparel chain for an undisclosed price to a group that includes a Spanish construction firm and a division of Donaldson, Lufkin & Jenrette Securities Corp.

The investor group is led by Sefinco Ltd., an affiliate of Entrecanales Y Tavora SA, an international construction company based in Madrid, and the Sprout Group, a division of Donaldson Lufkin.

Loehmann’s, based in New York, operates 77 specialty stores selling upscale women’s apparel at a discount. It had sales of $334 million in 1987 and currently employs 2,700 people.

May’s shares closed $2.875 higher at $36 on the New York Stock Exchange. Traders said the rise was because of a Wall Street Journal report that May is auctioning a share of its interests in 29 regional shopping malls as well as a substantial block of its own stock to fight potential raiders. The St. Louis company would not comment on the report.

The company said the Loehmann’s sale was expected to be competed by the end of August, subject to completion of a definitive agreement. May is the nation’s sixth-largest retailer based on June sales.

Campeau Corp., which bought Federated Department Stores Inc. in May, agreed to sell Federated’s Filene’s and Foley’s stores to May for $1.5 billion.

A May spokesman said proceeds of the Loehmann’s sale will be used for general corporate purposes and that the financing for Filene’s and Foley’s has been completed. The Loehmann’s sale is the result of an unsolicited offer and provides a good return for shareholders, the spokesman said.

Loehmann’s was started in 1921 when Frieda Loehmann opened her first store in Brooklyn, N.Y. She bought directly from manufacturers’ workrooms and paid cash at the time of purchase.

Because of this she was able to buy merchandise at a lower price and pass the savings on to customers. She has been credited with pioneering the retailing method called “off-pricing.”