Federated May Buy Marshall Field’s
Federated Department Stores Inc., the owner of Macy’s and Bloomingdale’s, said it might buy the Marshall Field’s department-store chain from Target Corp.
Buying the 62-store chain would allow Federated to add locations in new states, including Wisconsin, Michigan and South Dakota, at a time when department store and mall expansion has slowed. Marshall Field’s could fetch as much as $2.9 billion, analysts said.
“The broad-line department stores in general have not had a lot of good growth,” said Michael Wilson, who helps manage about $1.7 billion in assets at Holt-Smith & Yates Advisors in Madison, Wis., including Target shares. “It is a way for a company like Federated to get some growth quickly.”
Rising sales in the last two months at department stores including those owned by Cincinnati-based Federated make an acquisition more likely, analysts have said. Federated last week raised its first-quarter profit forecast after sales rose a more-than-expected 6.8%.
“Federated is one of the companies interested in pursuing the potential acquisition of Marshall Field’s as an ongoing business,” Target spokeswoman Lena Klofstad said. She declined to comment further.
Rival May Department Stores Co. might also be interested in Marshall Field’s, analysts including Linda Kristiansen at UBS Warburg have said. May spokeswoman Sharon Bateman declined to comment.
Target last month said it was considering selling Marshall Field’s and the Hayward, Calif.-based Mervyn’s chain, which had declining sales last year, to focus on its discount stores.
Target may find it easier to sell Marshall Field’s, which is attracting shoppers by adding merchandise including Thomas Pink shirts and Burberry overcoats, analysts said. Marshall Field’s sales surged 9.9% in March.
Shares of Federated fell 9 cents to $52.46 on the New York Stock Exchange. Federated made the announcement after the close of U.S. markets.
Shares of Minneapolis-based Target fell 85 cents to $42.86 on the NYSE.
Target, the second-largest U.S. discount retailer, bought 152-year-old Marshall Field’s in 1990. The chain has locations that are “unmatchable” in urban markets in the Midwest, UBS analyst Gary Balter wrote.
Marshall Field’s flagship store on State Street in Chicago is the second-largest department store in the world with 800,000 square feet on 10 floors. Shoppers can buy $400 vases by Poole Pottery and $175 cookware from Le Creuset.
Mervyn’s and Marshall Field’s sales fell for the last three fiscal years as consumers pared spending and turned to Kohl’s Corp. and Target’s discount stores.
