According to a report in The Wall Street Journal (March 11, 2002), Federated Department Stores (Cincinnati) and May Department Stores (St. Louis) have been holding preliminary merger discussions. A merger between the country's two largest department store chains would produce a retail organization of nearly 900 stores doing roughly $30 billion in annual sales.
The Journal said no deal is imminent, and neither party would comment on the rumors.
This is evidently not the first time Federated and May Co. have held “informal talks.” And even if these talks go nowhere (and one observer speculated to The Journal that the publicizing of the talks would likely sink them), it suggests that a consolidating trend in the suffering department store sector will probably continue. Speculation regarding Dillard's (Little Rock, Ark.) being absorbed up by one of the bigger chains has picked up steam since founder William Dillard's death in February. There is speculation, as well, that Target Corp. (Minneapolis) may be anxious to dump its profits-draining Marshall Field's department store division.
May Co., which has lower sales but more market capitalization than Federated, operates a nationwide chain of 435 stores under the Lord & Taylor, Foley's, Filene's, Hecht's, Strawbridge's, Robinsons-May, Famous-Barr, L.S. Ayres, Meier & Frank, The Jones Store and Kaufmann's nameplates. Federated has about 450 Bloomingdale's, Macy's, Lazarus, Bon MarchŽ, Burdines, Rich's and Goldsmith's department stores.