Federated to Sell Lord & Taylor

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Federated Department Stores Inc. said yesterday that it plans to sell Lord & Taylor before the end of the year because the division doesn't fit into its "strategic focus."

"What took them so long?" asked retail consultant Kurt Barnard, adding that getting Lord & Taylor on the right track requires more resources than a mega-merchant like Federated would be willing to provide. "It would take too much money and work to put it in any kind of shape."

Part of the problem is that Lord & Taylor's brand positioning isn't well-defined, he said, making it virtually indistinguishable from Macy's, Saks Fifth Avenue, Bloomingdale's and other middle-market department stores.

"Today Lord & Taylor is what? I don't know," he said.

Federated, Cincinnati, said its decision had more to do with its plans for Macy's and Bloomingdale's.

"We have concluded that Lord & Taylor does not fit our strategic focus for building the Macy's and Bloomingdale's national brands," Federated chairman/president/CEO Terry J. Lundgren said in a statement.

Federated might face a struggle trying to unload Lord & Taylor, though its "real estate is terrific," Barnard said. The chain's Manhattan flagship on Fifth Avenue "would be a great location for Wal-Mart or Target, although any retailer would want it."

Federated acquired Lord & Taylor as part of its deal to buy May Department Stores for $11 billion last year. The 55 Lord & Taylor stores on the East Coast and in the Midwest are just a drop in the bucket of the more than 950 stores Federated now operates.

Lord & Taylor was slow to enter the growing e-commerce arena, having only an informational Web site until after it was acquired by Federated. Lord & Taylor's sales were $1.57 billion in 2004.

The deal with St. Louis-based May brought with it stores in 15 states where Federated wasn't doing business at the time. Federated will start renaming many of those stores this year as part of its strategy to turn Macy's into a national brand.

Chantal Todé covers catalog and retail news and BTB marketing for DM News and DM News.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters

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