Federated moved quickly on Liberty House purchase
By Andrew Gomes
Advertiser Staff Writer
WAILEA, Maui — John Monahan, the man who led kama'aina retailer Liberty House through four years of turmoil and bankruptcy reorganization, thought he would have had more time with the retailer.
In his first public comments about the purchase by Macy's parent Federated Department Stores Inc., Monahan said he was surprised by how quickly Federated moved to buy Liberty House.
Monahan, who last week ended his work as president of the company being transformed into Macy's, said that even though he suspected it was only a matter of time before the investment banking firms that acquired Liberty House in bankruptcy sold the 152-year-old company, he figured a sale could have been a couple of years off.
"The end came a lot faster than we thought," he said.
Monahan said the moment Federated completed its $200 million purchase of Liberty House 11 days ago, he was out of a job, and shortly thereafter cleared out his office. He also said he will not do any consulting for Macy's.
His departure was a given, although Monahan had indicated he planned to stay on through a transition period that Macy's has set at 90 days.
Monahan, speaking yesterday to about 150 people at a shopping center industry conference in Wailea, reflected on his tenure over the past four years and how he had been looking forward to building Liberty House back up after bringing it out of bankruptcy in March.
"I think the words of (Grateful Dead) musician Jerry Garcia summed it up best when he said, 'What a long, strange trip it's been.' Really, we had a lot of ups and downs."
Monahan joined Liberty House in 1990 as vice president of stores, helping expand the chain in the islands and in Guam. He became president in 1997 as the company struggled with slacking sales, overwhelming debt and criticism that it had neglected local customers for higher-spending Japanese visitors.
Liberty House was forced to file for bankruptcy a year later, and Monahan helped buckle the company down by closing 22 stores and refocusing on Hawai'i shoppers.
Monahan said yesterday that in two years the company reduced its cost structure by more than one-third, from $165 million to about $100 million, which resulted in 2000 being its best year in a decade. In each of the last two years, the retailer has posted a profit of about $9 million, excluding extraordinary expenses.
The gains, however, came at great expense as more than 1,600 employees were laid off.
Still, Monahan said sometimes companies have to take a brutal assessment of their operations.
"There is fat in every organization," he said.
Monahan said that is especially crucial for retailers in Hawai'i who, as part of an increasingly global marketplace, have to be ready to compete with the largest retailers in the world.
"Think about it," he said, "did anyone ever think Macy's would operate a store in Hilo?"
Macy's is expected to increase efficiency at Liberty House with its centralized management and distribution operations in California. Macy's vice president Deena Nichols will oversee Hawai'i operations.
Monahan said he was surprised that Macy's decided to keep seven of the eight Liberty House resort stores. He said the Macy's intent to employ local buyers for island-specific and Hawai'i-made merchandise makes sense.
Monahan said his plans for the future still are uncertain, although he plans to stay in Hawai'i. He is a member of the Hawaii Business Roundtable and serves on the boards of the Polynesian Cultural Center, Aloha Council of the Boy Scouts of America and the Hawaii Nature Center.
