By Rick Moss
As expected, Federated Department Stores announced yesterday that it will sell its Lord & Taylor chain, which it had acquired along with the May Co. deal, to the principals of real estate investors/developers NRDC Equity Partners and Apollo Real Estate Advisors.
The cash price for the 48-store chain (41 along the Northeastern corridor and seven in Illinois and Michigan) will be $1.2 billion, with closing expected during the third quarter of 2006. L&T had sales of $1.57 billion in 2004, according to Bloomberg.
In a statement to the press, NRDC indicated that they intend to keep the chain intact and retain Jane Elfers in the position of CEO.
"Lord & Taylor has been an iconic national brand for 180 years," said NRDC President Richard Baker. "We believe there is significant opportunity to continue the revitalization of the brand begun in 2003 by Jane Elfers and her management team."
Although, according to the New York Times, Baker has said they will keep the flagship Fifth Avenue store, plans do not preclude the possibility that some property will be sold off. NRDC, which also acquired Linens 'n Things in partnership with Apollo in February, said they are reviewing the real estate portfolio but that "no decisions have been made on any individual stores."
Moderator's Comment: How do you rate the future prospects of Lord & Taylor under its new owners? How will springing the chain lose as an "independent" affect the department store landscape?
From the moment the Federated/May deal was announced, most knew Lord & Taylor was earmarked for sale. It was clear that Federated would have its hands full hanging the Macy's banner on 400 May locations, and L&T appeared to be a market segment redundancy to Bloomingdales, also in the Federated stable.
There are malls (Willowbrook, here in North Jersey, for instance), that have Macy's, Bloomies and L&T as anchors. So the challenge to Ms. Elfers is clear...how do you assure that your chain has a reason for being?
With the huge effort to create the national Macy's brand, Federated's eye could be off of Bloomingdale's long enough for L&T to make some distinctive moves and upgrade its "reputation for dowdy fashions and older shoppers" (NYTimes). On the up side, L&T could emulate Nordstrom as opposed to Bloomingdale's. Now that's head-to-head competition worth aspiring to. - Rick Moss - Moderator