Macy's on State Street?
By Rachelle Bowden in News on Jan 21, 2005 5:59PM
Two years ago Federated Department Stores (Macy's, Bloomingdale's) and May Department Stores (Marshall Field's, Lord & Taylor, Filene's, Robinsons May) talked about merging but it didn't work out. Now they're talking about it again.
What's changed to make them reconsider? Well, after 3 years of disappointing sales, May's just canned Gene Kahn, who was their president and chief executive. And the rumor is that the sticking point in the 2002 negotiations was who would emerge as the big chief. With Kahn gone it's almost like that issue doesn't exist any more.
On Thursday, execs at May said the board might now be more open to listen to a merger proposal from Federated, if one were made. Meanwhile Federated is saying they're ready to move.. like NOW.. on .. uh.. SOMETHING. It's speculated that they might settle on just a slice of May, instead of the entire company. Since Federated is still annoyed about losing Marshall Field's to May 7 months ago in a bidding war, it's most likely that's the slice they're looking to get back. And now with declining store sales and no big kahuna to lead them and with $6.8 billion in debt, May might be open to selling Marshall Field's.. maybe for less than they even paid for it ($3.2 billion)... or at least that's what Federated is hoping.
One big issue if the deal goes through is the name of the store. An analyst in NY says "It will probably be Macy's on State Street ... Marshall Field's is history if this deal goes through." While another suggested that some of the smaller Field's stores may turn into Bloomingdale's. And why would Federated do this? Because they get more power in advertising, distribution and supply with a national name like Macy's than with a regional department store name.