How Do You Spell Relief? Robert Campeau

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While quite a few suppliers are still cautiously providing goods to Bloomingdale's and other Campeau subsidiaries, the threat of new cutoffs hangs over the stores. Notes Bert Hand, president of Hartmarx: "These stores are going to end up somewhere, whether in the current organization or under new ownership. Either way, we want to make sure that we don't lose continuity. But on the other hand, we can't put ourselves in too much risk."

Most Allied and Federated stores are likely to stay in business no matter how Campeau ultimately fares. The chains are far better merchandisers than B. Altman, a declining retailer shuttered last year by George Herscu, an overleveraged Australian raider who acquired the company in 1987. The problems at Allied and Federated stemmed from no fault of their own but were caused mainly by the audacious price that Campeau paid.

Yet Bloomingdale's and other Campeau chains, which operate in an extremely competitive industry, could be crippled by the financial turmoil. For one thing, the exodus of experienced managers comes at a time when department- ! store retailers are under attack from catalog merchants, discounters and specialty stores. Moreover, a crunch could occur this spring if Campeau's troubles cause more suppliers to defect. Says Gillian's Levy: "All I care about now is for the situation to be resolved as soon as possible, or Federated will no longer be viable. The longer they procrastinate, the longer they go without merchandise. Then customers will start going to other stores, and Federated will lose them forever."

Many suppliers blame the 1980s buyout binge for the Campeau debacle. In the process of arranging enormous loans for overreaching raiders, the lenders and investment bankers paid little or no attention to whether the buyouts could survive over the long haul. The toll has been particularly heavy among retailing companies. In a study of 25 retail buyouts between 1983 and 1985, the Ernst & Young accounting firm found that nearly 40% had gone bankrupt or slashed their operations. For big-eyed shoppers like Campeau, the buyouts might have looked tempting, but they were hardly bargains.