Women’s Wear Daily
04.18.2014
fashion-features
fashion-features

Consolidation Fever: Which Store Logos Could Vanish Next?

With earnings reports trickling in this month, rumors of retail consolidation have resurfaced. The latest: a merger of Federated and May Co.

fashion-features/news
View Slideshow
Most Recent Articles In Fashion Features
Most Recent Articles In Fashion Features
Peter J. Solomon, chairman of the investment banking firm that bears his name, said he’d heard reports of a Federated-May merger on several occasions in recent years. "They should merge," he said. "The problem with department stores has been the same for 50 years — the absence of top-line growth," he said. "In the absence of that, they need bottom-line growth, and they’ve accomplished some of that by merging divisions and internal consolidation, as Federated just did in Atlanta. A merger wouldn’t solve the top-line issue any more than consolidation has, but it will help give them a more efficient cost structure and maybe help them buy better.

"Department stores’ great strength was as providers of credit, but that hasn’t been the case since the introduction of the walk-around credit card 50 years ago. Even when revenues were steady or growing, they’ve been losing market share, giving up about one-third of it in the Eighties alone. They’re great institutions that no longer have the importance they once had.

"This Federated-May thing has been pretty much an annual rumor, but I attach importance to every rumor, and this one would make a lot of sense. Even when you look at the two companies’ overlap geographically, it’s not as serious as you might think — just a few markets, including southern California."

Federated is strong on the East and West Coasts and in the Southeast, while May is strong on the West Coast, in Texas and parts of the Northeast and Midwest.

Illustrating Solomon’s point about market share, retail consultant Jack Schafer, of Jack Schafer Associates in San Francisco, cited U.S. Commerce Department statistics that showed department stores losing market share, as a percentage of nonautomobile sales, for seven straight years through 2001, the last full year for which figures were available. Department stores peaked with a 12.8 percent share in 1993 and 1994 but have since declined steadily, to 10.2 percent in 2001.

Most analysts don’t see any major bankruptcies on the horizon, though they do see plenty of store closings, with retailers weeding out unprofitable units. Simultaneously, retailing increasingly becomes a game of scale, making consolidation likely.
View Slideshow
Page:  « Previous Next »
VIEW ARTICLE IN ONE PAGE
load comments

ADD A COMMENT

Sign in using your Facebook or Twitter account, or simply type your comment below as a guest by entering your email and name. Your email address will not be shared. Please note that WWD reserves the right to remove profane, distasteful or otherwise inappropriate language.

Ads by Google

Newsletters
Newsletters

Sign upSign up for WWD and FN newsletters to receive daily headlines, breaking news alerts and weekly industry wrap-ups.

Publications

ArticleFinder

Fashion


Choose By

Clear

How it works

Close

Lorem Ipsum
Dolor sit amet, consectetur adipiscing elit. Vivamus ac nibh et risus lobortis scelerisque tempor nec enim. Etiam facilisis sapien sit amet.

Lorem Ipsum
Dolor sit amet, consectetur adipiscing elit. Vivamus ac nibh et risus lobortis scelerisque tempor nec enim. Etiam facilisis sapien sit amet.

Lorem Ipsum
Dolor sit amet, consectetur adipiscing elit. Vivamus ac nibh et risus lobortis scelerisque tempor nec enim. Etiam facilisis sapien sit amet.

Lorem Ipsum
Dolor sit amet, consectetur adipiscing elit. Vivamus ac nibh et risus lobortis scelerisque tempor nec enim. Etiam facilisis sapien sit amet.

Lorem Ipsum
Dolor sit amet, consectetur adipiscing elit. Vivamus ac nibh et risus lobortis scelerisque tempor nec enim. Etiam facilisis sapien sit amet.


Or