“Now, Albert, this is going to be a two-tier offer with a kind of special spin on it, which I’ll get to momentarily. The first tier of the offer, the cash tier, will have a tight deadline on it. I’m suggesting a deadline of ten business days, Albert.… Why so tight? I’ll tell you why. For one thing, we don’t want to give the enemy any time to organize any kind of poison-pill defense. For another thing, it’s important to act fast because right now the company is in a state of shambles. Since the old man died, nobody knows who’s running the store. The whole family is at each other’s throats. The widow wants to sell the store, the daughter doesn’t. The son got zip in the old man’s will, and he may decide to sue. If he sues, the whole shmeer gets tied up in litigation, we’ll be up to our ass in lawyers, and none of us is gonna get anywhere.… How do I know all this? Let’s just say I got my sources. So strike while the iron is hot, Albert. Strike while the iron is hot.
“Okay. Now, if the shareholders don’t agree to accept the two-tier offer within ten business days, they lose their chance to get any cash at all. All they’ll get is cram-down paper, whatever junk your company’s got lying around. This will force family members, and any die-hard Tarkington loyalists, to sign agree-to-sell papers fast and will put pressure on other shareholders to do the same. The widow and the daughter are important. They’re not a majority, but we need to get them in our pocket.… Of course it’s legal. Would I propose anything to a man of your caliber that wasn’t legal, Albert? All I want to do for you is help you maintain your record as a winner.
“Now here’s the beauty part. Once we announce that Continental is about to do a hostile on Tarkington’s, I’m counting on our competitive bidders to come in with higher bids and force the price up. Let’s say you play the game for a day or so—raise your bid a point or two. Now the ball’s in play, right? At this point the press will be having a heyday with the story, and all the shareholders will be rubbing their hands over how much money they’ll be getting. This is the point at which you’ll announce that you intend to drop out of the bidding, ’cause the price is just too high.… Now wait a minute, Albert, please let me finish. You haven’t heard the spin yet.
“At precisely this point in the scenario, I leak the store’s secret figures to the press—the overvalued inventory, the accounts receivable, the whole shmeer, making Tarkington’s look like a two-bit shlock house. Your competition will back out fast, withdraw their offers. That’s when you come back into the game with a much lower offer—let’s say thirty bucks a share as a ballpark figure. The shareholders kick and scream, but what can they do? You’ve got their signed agreements to sell. These agreements don’t mention any price. They don’t sell, we can sue them for breach of contract. They’re in a take-it-or-leave-it situation.… I tell you it’s legal, Albert. I have checked with my attorneys, and it’s perfectly legal. It’s just that it’s never been done quite this way before. Albert, you’re going to end up—you and me, that is—with America’s top fashion label for thirty, thirty-two bucks a share max. And we’ll have reamed them, Albert, baby—we’ll have reamed ’em all! That’s the spin I’ve put on this ball for you.…
“Ah, you mention my personal shareholding in Tarkington’s. I was just coming to that, Albert. I personally own only about twelve percent of the voting shares. But I am willing to sell you those shares at the price I mentioned earlier, sixty dollars a share.… Now, wait! Hold on, Albert. I know that’s a high figure, it’s an arbitrarily high figure, but there is a sound reason for that high figure. There’s a method to my madness, heh-heh-heh. You need to pay me that high a figure to establish your credibility, Albert. Once it becomes publicly known that you have purchased my shares, got your toe in Tarkington’s door at sixty dollars per, this establishes the sincerity of your offer. In real estate parlance, this can be called your earnest money. It establishes the earnestness of your intent. The other shareholders will be led to believe that sixty is your genuine offering price, even though—heh, heh—it really isn’t going to be in the end. To establish your credibility at the outset of this deal is very important, Albert. We’ve got to make the others think that’s the price they’re going to get, too.…
“Yes.… Yes.… But of course. At that price, I’m going to make a very special deal for you, Albert. At that price, I’m willing to accept only fifty percent in cash, not eighty. We won’t publicize that little aspect of the deal, naturally. That little aspect will be strictly between you and I—entre vous, as they say in French. The other fifty percent I’ll take in whatever cram-down paper you want to offer me, any junk you want to let me have to make up.… Now, Albert, I’m not implying that any of your notes or bonds are junk. I’d be proud to be the owner of any paper you want to pass along to me in the deal, just for the prestige of being associated with your good name. But, you see, throwing in fifty percent in paper reduces your cost per share considerably. And, when you stop to think that you’re gonna get the rest of the shares you need for between thirty and thirty-two—eighty percent cash—that drops your cost per share even more. It’s a beauty of a deal I’ve worked out for you, Albert, and as your financial adviser in this takeover, I must recommend that you accept it.… Yes, I realize you’ve got a board of directors to consult. You do that, Albert, and get back to me. I’ll be in the office all day long. Just remember, that time is of the essence if we’re gonna pull this deal off, and tempo fugit, as the fella says, Albert, tempo fugit.”
He hangs up the phone and, with a look of distaste on his face, briefly studies a slip of paper on his desk. Then he picks up the phone again and dials an 800 number. “Yes,” he says to the young woman who answers the phone. “This is Mr. Harvey B. Knowlton calling, and I’d like to order an item from your current catalogue, please. The item number is fourteen-C.… Yes, that is correct, the four-piece matched set of hand-tooled alligator luggage. Forty-six hundred dollars.… No, it is not for me. It is to be sent as a gift to a friend.… His name? His name is Mr. LeRoy Goldfarb, three-two-three West Ninety-seventh Street, New York City.… No, no monogramming. Mr. Goldfarb does not like monograms.… Yes, let me give you my American Express credit card number. The last name is Knowlton, K-N-O-W-L-T-O-N, and the credit card number—”
The details completed, he hangs up and makes another call.
“Goldie? Moe here. Look, Goldie, we got a set of alligator luggage coming from the Smith and Summers catalogue. Forty-six hundred retail. You oughta get at least fifteen hundred for it off your truck, and I’ll take my usual percentage.… Listen, Goldie, I’m planning to sorta phase myself outa this aspect of my business. Too busy with heavy-duty arbitrage. So maybe you better look around for someone else to scout up credit card numbers for you.… Whaddaya mean where do ya find ’em? Dumpsters. Garbage cans. Give ya a tip. I passed a line of dumpsters on Park between Seventieth and Seventy-first on my way to the office this morning. That’s where you find the johns with the high credit limits, in the higher rent districts.”
Smyrna, his secretary, calls from the outer office. “Tommy Bonham on one, Moe,” she says.
“Ah, Tommy,” he says, picking up the phone. “You’re up bright and early this morning, aren’t you? Thank you for calling me back, thank you very much indeed. Look, reason why I called is I need those figures from you right away, buddy. I’m particularly needful of your accounts receivable figure.… Why? Now, Tommy, we’ve been through all this before. I just need it, is all. Just say I need that figure if I’m gonna help you take over the store, never mind why.… Tommy, Tommy, I want to be your friend in this, so don’t give me a hard time, okay? And I don’t need to mention that other little matter we both know about, do I? It would be … unfortunate if that got out, wouldn’t it? Just give me that figure, and we’ll still be buddies. Remember, you owe me one, Tommy. You owe me a big one.”
There is a sign on Moe Minskoff’s office wall: EVERYTHING IS LEGAL IF YOU DON’T GET CAUGHT.
Tommy Bonham has called a meeting of the store’s full staff for nine o’cloc
k that morning, but Miranda has arrived a little early, and she taps on the frame of his office door just as he is hanging up the telephone. He smiles and waves to her to come in.
“I found three,” she says, and places a pale blue Tarkington’s shopping bag on his desk. “I’ve taken all three out on memorandum.”
“Three what?”
“Clutch bags. In silver.” She lifts one out of the bag. “This is my favorite. It’s seven ninety-five.”
“What—?”
“For your rich Texas broad. The Lone Star klepto. Didn’t you say she needed a bag for a party tonight?”
He laughs. “You’re right. I’d forgotten all about it.”
“I’d have messengered these over to her, but I didn’t know her name.”
“I’ll have Linda take care of it.” He rises from his chair and takes her hand. “Thanks for remembering,” he says. “See why you and I are going to make good partners? Now let’s get into our meeting.”
Some ninety-two employees of Silas Tarkington’s store have gathered in the store’s fifth-floor employees’ cafeteria this morning, an hour before the store is scheduled to reopen its doors for business. There are the merchandise managers, the buyers, the saleswomen and men. There is Paul, the comptroller; Celestine, the credit manager; Walter, the display director, and his two willowy assistants who dress the store’s windows. There are Molly and Odile, the two little dressing-room maids in their starched black-and-white uniforms; Oliver, the night watchman; James, the doorman; Sam, the tailor in charge of the alterations department, and his two seamstress assistants, Becky and Francine. All their faces look solemn, and some look apprehensive. As she and Tommy enter the room together, Miranda notices two conspicuous absentees. Pauline O’Malley is not there, having telephoned to say that she is still too devastated by the loss of her boss to appear in public. Also, Smitty is not there. Miranda whispers this fact to Tommy, who merely shrugs.
Miranda takes a seat, and Tommy moves to the front of the room and takes an informal pose, seating himself on the edge of a cafeteria table with one perfectly pressed dark trouser leg swung over the side.
“Good friends,” he begins. “Good friends of mine, good friends of the store’s, good friends of Silas Tarkington’s: I don’t need to tell you that this is a sad occasion for all of us here today. The sudden death of our founder—Mr. Si, as most of us called him—last Saturday was a profound shock to all of us. Not only will he be deeply missed, he can probably never be replaced.
“I would like to say at the outset that I asked you all to come in early this morning not because I see myself as his successor or replacement, and not because I am assuming the title of the new president of Tarkington’s. That will be up to the store’s board and stockholders to decide. On the other hand, I feel—and I am sure all of you would agree—that Mr. Si would have wanted us to carry on during the next few trying weeks, just as we did when he was off on one of his buying trips, just as though he were still here. Therefore, I would ask that there be no long, sad faces in Mr. Si’s store today. I would ask that our clients—who are also our friends and our guests—be treated with the same bright helpfulness, the same attention to service and detail, as always. Some of our clients may express condolences to you. I would suggest responding to this with a simple Thank you.’
“Now, since it may be several weeks until a new president is named, I’d like to address myself to some of the problems we may be facing in this period. You’ve all heard, I’m sure, the rumors that Tarkington’s has become the object of a hostile takeover. My friends, these are more than rumors. These are facts, and the company making the most aggressive moves right now appears to be Continental Stores, Incorporated, of Chicago. Two foreign companies have also made overtures. Now that Mr. Si is dead, these overtures will certainly become more aggressive. Naturally, whether such a takeover succeeds will depend on the votes of our stockholders. I can only say this: I have no quarrel with Continental Stores. They have a right to exist, just as we have a right to exist. But I think you’ll agree with me that if Tarkington’s were to become part of the so-called Continental Family of Stores it would become a very different sort of store from the one Si Tarkington created, the store we have known and loved. I, for one, would be very sorry to see that happen. A number of you in this room are stockholders. I should like to ask you that in the event of a proxy war you vote with me, against a takeover.”
There is a polite round of applause.
“I would like to be able to tell you,” he continues, “that we are in a strong position to fight any such takeover. Unfortunately, this is not the case. I would also like to be able to tell you that Si Tarkington died leaving the store in a powerful financial position. Unfortunately, this is not the case either. As all of you know, the past eighteen months have been very difficult for all retailers. Retailers’ profits nationwide have fallen between thirty-five and forty percent. I wish I could say that Tarkington’s has stayed ahead of the pack. But, in fact, in the fiscal year ending last January thirty-first, gross income was down to five-point-five million, from eleven million dollars the year before. That’s a drop, ladies and gentlemen, of fifty percent.
“Even so, with a gross like that, you might say our balance sheet ought to look good. It does, but it is also misleading. Retailers such as ourselves list, in our balance sheets, something called Accounts Receivable, and Accounts Receivable are listed in the assets column. Accounts Receivable simply represents merchandise that has been sold but not paid for. Thus, while our Accounts Receivable figure appears as a very large asset on our balance sheet, it represents no cash whatsoever. Mr. Si, of course, believed in a very liberal credit policy. He never pressured clients to pay their bills. I believe, in the future, the store is going to have to take a very long, hard look at that policy. Don’t you agree, Celestine?”
“Absolutely!” replies the credit manager tartly. “I have one client—I won’t mention her name, but a lot of us know who she is—who’s owed the store twenty-seven thousand dollars for the past two years. The other day she was in the store, and I posted an eight-thousand-dollar Geoffrey Beene to her account, and she still hasn’t paid a penny! It costs my department ten dollars a month just to send out a bill. I used to say to Mr. Si, ‘They’re taking advantage of you, these clients.’ Not all of them, but some.”
“There are other areas in which I think we could be more cost-efficient,” he continues. “For instance, Mr. Si never believed in keeping an item of apparel in the store for longer than a season. This is sound policy. But before shipping a garment out to be resold—to Filene’s Basement, Value City, Loehmann’s, and the rest—Mr. Si insisted on removing the Tarkington’s label. Obviously, we could get much better prices for our merchandise if we sold it label-in. It would be a change in policy that most of our regular clients would never be aware of, and it would greatly increase cash flow.”
“Hear, hear!” several department heads say.
“Of course, any changes a store like Tarkington’s makes should be made very slowly and carefully,” he says. “We still like to be known as expensive, and even a bit intimidating. That’s part of our glamorous image. For instance, Si never believed in having a sale. I could see his point. Shoppers tend to develop a sale mentality. They never set foot inside a store unless there’s some sort of sale going on. As a result, there’s hardly anything being sold in New York anymore at the full retail price. I’m not suggesting we go the Saks route, where there’s something on sale in the store every day of the year. But I might suggest, with fall and the Christmas season coming on, that we have one storewide post-Christmas sale once a year, the way, for instance, Harrod’s does.”
“Hear, hear!”
He nods in Miranda’s direction. “I’d even be in favor of advertising that sale.”
“Hear, hear!”
“You know, and I do too, that other merchants in town call Tarkington’s an anachronism. I don’t want us to become an anachronism.”
&n
bsp; “Hear, hear!”
Miss Rubinstein, head of the Bridal Department, raises her hand.
“Yes, Sarah?”
“Tommy, let me ask a question,” she says. “You were talking about storewide gross figures a minute ago. If the store’s profits are down fifty percent from a year ago, why are my department’s figures down sixty percent? And why are Diana Smith’s jewelry department figures up ten percent? We’re both selling luxury goods. By the way, where is Smitty?”
“She was notified of this meeting,” he says. “You have a good point, Sarah, and it’s another problem we face. Demographics show that our clientele is growing older. Every time I see in the paper that a rich society woman has died, I kind of groan and think, There goes another of our customers!”
There is laughter at this.
“And not enough rock stars, women like Madonna, are coming along to take those women’s places.”
More laughter.
“Rich older women still buy jewelry. But they’re out of the market for bridal apparel.”
Still more laughter.
“But seriously, Sarah, you have an important point. I’ve often thought that Tarkington’s ought to have a department offering designer apparel for children, and also for teenagers, so that we could start educating women to be Tarkington’s shoppers while they’re young.”
“Hear, hear.”
“I’d like to end this meeting on one final, even more serious note,” he says. “If we’re going to have the capital necessary to fight a takeover attempt, our company is going to have to do some serious belt tightening. I’m going to propose something you won’t like, but I hope it will be only temporary—a ten-percent cut in base pay, of those at the executive level only.”
Carriage Trade Page 13
