Federated Department Stores Inc. said Thursday it plans to shed its Lord & Taylor department store chain, which it inherited last year when it bought rival May Department Stores. The Cincinnati-based retailer appointed Goldman, Sachs & Co. and J.P. Morgan Chase & Co. to oversee the divestiture of the 55 store chain.
Federated said Lord & Taylor doesn’t fit with the company’s strategic plans for growing its Macy’s and Bloomingdale’s brands, according to Federated chief executive.
Of course L&T didn't fit well in to May's structure either. The brand was rather schizophrenic. In the Mid Atlantic states May positioned the chain as a rival to Macy's, but up in New England where May also owned the venerable Filene's chain, it positioned L&T as a step above rival Macy's. However, aside from maybe its midtown Manhattan location, the chain was no where near the quality of Bloomingdale's and only marginally better than Macy's or sister Filene's.
The question now is who would want to buy this pig that is spread across the states of New Jersey, New York, Illinois, Massachusetts, Connecticut, Maryland, Virginia, Michigan, Pennsylvania, Missouri, Delaware, and the District of Columbia? Rival Saks Inc. is also trying to sell a similar sized department store chain. Meanwhile, Nordstrom is already busy digesting locations it scooped up from Federated's earlier restructuring that immediately followed the purchase of May. Meanwhile, downscale department store chains like JC Penney are only just beginning to recover from prior troubles therefore likely keeping them out of the bidding. This leaves buyout firms and REITs as the most likely bidders.
In the meantime, Goldman Sachs and JPMorgan should hit the makeup counter for some lipstick because they'll need it for this pig.—Matthew Wurtzel
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