Allied Makes a Buy

"Retailing is a very simple business," says Allied Stores Corp. Chairman B. (for Benjamin) Earl Puckett. "The only problem is handling a multiplicity of details." Puckett handles details so well that he has built Allied into the biggest U.S. department store chain, with a $437 million-a-year gross. Last week, without spooning a nickel from Allied's treasury, he made it even bigger: he completed a deal to take over 84-year-old Stern Brothers* department store and give Allied its first outlet in Manhattan.

Stern Bros, moved uptown to its eight-story store on Manhattan's bustling 42nd Street in 1913, thoughtfully included a carriage entrance in the rear to accommodate the Astors and the Vanderbilts who lived on nearby Fifth Avenue. Both the carriage entrance and most of the carriage trade are gone now, but Puckett thinks Stern's new middle-income customers are right for Allied. To get more customers, Puckett plans to build a string of Stern Bros, suburban stores around New York City. Grossing $33 million last year, Stern's will be the 75th store in the chain and second largest. Largest: Boston's $80 million-a-year Jordan Marsh Co.

No Brain-Trusters. Shrewd-eyed Earl Puckett learned to spot a good bargain from his father, a horse trader who ran a 120-acre farm in Wayne County, Ill. Seeing no future in farming, young Earl learned to be an accountant by mail. But he put his horse sense to good use when he became comptroller of Loeser's department store in Brooklyn in 1928. He revamped Loeser's antiquated accounting system, helped keep it on an even keel when the Wall Street crash swamped many a retail store, became its $50,000-a-year president in 1931. Three years later, he was boss of Hahn Department Stores, a shaky nationwide 57-unit chain.

Puckett lopped $5,000,000 in preferred stock arrears off Hahn in capital reorganization, changed its name to Allied Stores. Then he sharply reduced the authority of the central office management. "I don't want any brain-trusters for managing directors," explained Puckett. "All I want is good top sergeants." Like a good commander, he delegated authority to his store managers in the field, left them alone if they produced sales. To supply his retail army with plenty of sales ammunition, Puckett built up private Allied lines in sheets, men's clothing, appliances.

Unhappiness for Sale. Sales and profits inched up, but Puckett pounded for more, opened directors' meetings with the statement, "We're lousy." When an assistant proudly announced he had found a way to cut a store's expenses by $10,000 a year, Puckett asked him how long he had been with Allied. "Ten years," answered the underling. Puckett deflated him with: "To think you could have saved us $100,000!" To keep sales high, says Puckett, "it is our job to make women unhappy with what they have."

Puckett's merchandising of unhappiness pushed Allied's profits from $25,000 when he took over to $13.7 million in 1950. Last week, as he puffed on a six-inch, 60-c- Havana cigar (he smokes 20 a day), 53-year-old Earl Puckett talked of a bigger aim. "When Hahn Department Stores was organized in 1928," said he, "they promised that it would become a $500 million-a-year company. We aim to make good on that promise."

* The deal: Stern's will buy up and retire 42.8% of its stock (145,332 shares), paying stockholders $24 a share. Puckett will get 81% of the remainder (157,252 shares), from two big stockholders, Stern's President Thomas W. MacLeod and Manhattan's Manufacturers Trust Co., by trading them one share of Allied for two shares of Stern's.

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