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May Department Stores: Deal
built 622 days ago
Among department stores, Federated, which acquired May Department Stores Co. last year, reported a robust 8.5 percent same-store sales gain, beating the 4.8 percent estimate. Same-store sales include only Macy's and Bloomingdale's stores that existed before the deal closed. Federated ... raised its December forecast.
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Even before the deal was announced in February, Federated's purchase of St. Louis-based May was viewed as a potential savior for department stores. Federated used its "Reinvent Strategy" to revitalize its stores and converted its regional chains into Macy's. The goal was to establish Macy's as a national brand that represents quality and fashion.
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With large discounters beating them on price and trendy specialty shops beating them on up-to-date fashions, department stores are trying to remake their image and revamp their offerings. To start, department stores are focusing less on "departments" and much more on brands. Sears jump-started its apparel division in 2000 with the purchase of catalog specialist L.L. Bean for $1.9 billion. At the end of 2002 J.C. Penney inked an exclusive deal to offer Bisou Bisou apparel, a line of contemporary sportswear previously available at upper-end retail outlets.
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Federated announced it would acquire May Stores in a deal worth $17 billion to create a national powerhouse in department store retailing. Federated announced it would expand the Macy's brand and close many store brands operated by May including Famous-Barr, Filene's, Foley's, Kaufmann's, Robinsons-May, Strawbridge's and The Jones Store. About 330 stores would convert to the Macy's name and 68 duplicate locations where both stores are located will close in 2006.
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The deal involves 142 Saks department stores that operate under the Bergner's, Boston Store, Carson Pirie Scott, Herberger's and Younkers monikers. The purchase will more than double the size of Bon-Ton, which currently has 139 department stores in the Northeast and Midwest.
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