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Federated to sell Lord & Taylor
January 13, 2006
BY SANDRA GUY Business Reporter
Lord & Taylor is up for sale, and its stores may end up as new locations for an expanded Saks Fifth Avenue or another department store, analysts speculated Thursday.
Lord & Taylor's owner, Federated Department Stores, announced Thursday it will sell the 55-store chain so it can focus on its Macy's and Bloomingdale's department stores. The news ended rumors that had circulated for a year-and-a-half that Federated would dispense with the modernized but floundering Lord & Taylor, which has five Chicago area stores.
The Lord & Taylor chain garnered $1.57 billion in sales in 2004, and analysts immediately speculated that it could sell for $745 million after taxes.
The most likely buyers would be private-equity companies flush with cash. Private-equity companies have recently gobbled up Neiman Marcus Group and Toys R Us in separate deals.
Deborah Weinswig of Citigroup Smith Barney speculated that a private-equity buyer could buy Saks Fifth Avenue and Lord & Taylor, and rename all of the stores Saks Fifth Avenue.
Another analyst who asked not to be named said a smarter pairing would be Lord & Taylor with the upscale Parisian chain of 40 department stores in the South. Parisian is being sold by Saks.
Federated bought the New York-based Lord & Taylor chain as part of its stunning $11.9 billion takeover of the May Department Stores, including Marshall Field's and L.S. Ayres. The consolidation of the country's top two department-store chains, announced a year ago, took effect Aug. 30.
May Department Stores had tried to turn around the Lord & Taylor chain by introducing more fashionable merchandise and closing 32 stores that represented 38 percent of Lord & Taylor's store base but only 19 percent of the chain's total sales.
Federated expects to sell Lord & Taylor this year. Federated CEO Terry Lundgren, the man responsible for renaming Marshall Field's as Macy's, said that although Lord & Taylor didn't fit Federated's focus, it has "a great name, many outstanding locations, an experienced management team and a strong customer following."
Local shoppers have lost two Saks Fifth Avenue stores in the last three years, and could see more closings of Lord & Taylor stores.
After Saks announced last May it would close its Saks Fifth Avenue store at Old Orchard Shopping Center in Skokie, the shopping center proposed tearing down the Lord & Taylor and Saks Fifth Avenue stores to build an open-air shopping area filled with specialty retailers.
Two years ago, Saks closed its Saks Fifth Avenue store at Oakbrook Center mall in the western suburbs. It was replaced by a Bloomingdale's Home Store
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