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Arnold Aronson, director of retail marketing strategies, Kurt Salmon Associates, said, “This is a once-in-a-generation-type acquisition. It’s a very clean deal for an existing department store power and will have resounding long-term effects on growth and profits. Target has already squeezed some of the back office costs out, but there is still opportunity to reduce redundancy even more by a department store, rather than a mass discounter.”
Another retail source said, “May Co. would be willing to spend more” than Federated. “My money is on May Co., even though strategically it fits very well into Federated.”
By buying Field’s, May would narrow the size gap on Federated. It would also bring May a little more upscale, which the company has been trying to do. Several sources indicated the possibility that Federated and May might divide up Field’s, but that would be difficult since the State Street flagship would be coveted by both parties. They also believed that May Co. could go after some Mervyn’s sites, as well.
May declined to comment on Field’s, while Federated has already confirmed its interest in buying the chain. In 1990, May lost out to Target Corp., at the time called Dayton Hudson, in the contest to buy Field’s from Batus Retail.
In April, J.C. Penney sold off its Eckerd drugstore chain, sparking speculation that the Dallas-based retailer might bid on Field’s, which was wrong. “There is no interest on our part,” Allen Questrom, chairman and ceo of Penney’s, told WWD. “It doesn’t fit into our strategy” of focusing on moderate department stores with a heavy dose of their own brands.
There’s also been speculation that Saks Inc. might be interested, since the firm has a track record of acquiring regional department store chains. But for Saks, that’s ancient history. Since acquiring Saks Fifth Avenue in 1998, Saks Inc. has shifted its strategy to become more of an operating company focused on strengthening Saks Fifth Avenue and its department store group, rather than acquisitions. Also, the company is disbursing $285 million in dividends this spring and plans to spend significantly on Saks Fifth Avenue renovations, making a Field’s bid unlikely.