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l Regional department stores and family-controlled retailers such as Dillard’s and Gottschalks could capitulate to stronger competitors, after years of lackluster performance and resisting overtures. In a Dillard’s acquisition, May Co. would have an easier time surmounting antitrust hurdles since it has limited presence in the South, whereas Federated operates Rich’s, Macy’s and Burdines there.
“Belk’s is less likely to drop. Since it recently cleaned up a complicated shareholder structure, the company is less leveraged and Belk stores maintain strength in their markets,” said the Wall Street source. “But Dillard’s has to do something. Bill Dillard 2nd may be more willing to do something” than other members of the Dillard family, which controls the stock.
l “I know Liz Claiborne wants to do an industry-transforming deal, different from buying another Ellen Tracy,” said a financial source. “A VF-Liz deal could be interesting. It makes sense to have two giants coming together controlling the department store channel. Those discussions clearly have had to have taken place.”
l One brand said to be on the radar screens of many is L.L. Bean. There’s also some speculation in the food retail arena about Meijers and Fresh Direct being takeover targets. And supermarkets, such as Kroger, Wegman’s and Albertsons, could consolidate for increased buying power against mushrooming Wal-Mart SuperCenters and Target superstores.
l J.C. Penney, with a new ceo Myron Ullman 3rd coming on board this month and flush with cash after selling off Eckerd this year, could shift into acquisition mode. Ullman is financially oriented and more strategic in character rather than being a merchant prince, whereas his predecessor, Allen Questrom, was more about “getting more juice out of the orange,” said a retail analyst. The current strategy under Questrom is to focus on building the Internet business, an off-mall presence, and raising productivity of mall-based stores and no acquisitions are currently being considered.
l There are murmurings about Amazon.com, which one retail analyst said “wants to get more into brick and mortars.”
Several, but not all, industry sources contacted said they believe the recent rash of deals will trigger others. “Historically, there are a lot of copycats,” said Gil Harrison, chairman of Financo Inc. “Once they see a company do something, they decide they need to do something, too.”