2 Eastern Dept. Store Chains Sold : Retailing: May and J.C. Penney bid $460 million for John Wanamaker and Woodward & Lothrop.

May Department Stores Inc. emerged the victor Tuesday from a Bankruptcy Court bidding brawl for the Woodward & Lothrop and John Wanamaker chains, two of the oldest names in retailing.

An alliance led by St. Louis-based May offered creditors $460 million, besting a $439.1-million offer from a group led by rival Federated Department Stores Inc. of Cincinnati.

The Federated group declined to raise its offer further at the session led by U.S. Bankruptcy Judge Stuart M. Bernstein in New York, and the May bid was accepted.

“The deal is not completely done, but it is virtually done,” said Marc Abrams, an attorney for Washington-based Woodward & Lothrop.

The auction, originally scheduled to last two days, was mobbed by lawyers and creditors with interests in the outcome of the bankruptcy proceedings. The proceedings were widely regarded as a faceoff between May and Federated, both retailing superpowers.

Woodward & Lothrop and its Wanamaker sister stores have languished in bankruptcy since January, 1994. Creditors sanctioned the court-supervised auction of their 29 stores throughout Maryland, Virginia and eastern Pennsylvania.

Federated began the auction by sweetening a previous offer by $84 million, proposing to give creditors $439.1 million for the properties. May and its bidding partner, J.C. Penney Co., then proposed the winning bid.

Federated and May have become the dominant department store companies in the United States over the past several years, largely through purchases of other chains.

Federated operates eight Macy’s and Bloomingdale’s stores in Virginia and Maryland. It had wanted to convert 11 Woodward & Lothrops into Macy’s stores. That would have let Federated compete more effectively with May’s Hecht’s division, which, with 15 stores, is the Washington area’s dominant department store chain. May also owns Robinsons-May.

Federated is the nation’s biggest operator of traditional department stores. It has 354 branches and recorded $6.04 billion in sales for the first six months of the current fiscal year. May is the second-largest, with 315 stores and $5.56 billion in sales. The sales figures include specialty store results.