Retail merger effects unclear
Andrew Edwards
South Coast Plaza and Fashion Island representatives said Monday that
it was too early to judge the multi-billion-dollar merger between two
department store companies that own stores in each center, though
executives at one of the firms alluded to possible store closures.
Cincinnati-based Federated Department Stores Inc., the country’s
largest department store company, announced Monday that it had agreed
to purchase May Department Stores Co. for $11 billion in cash and
stock. As part of the deal, Federated also agreed to assume
$6-billion of St. Louis-based May’s debt.
Federated owns Bloomingdale’s, which has a store at Fashion
Island, and Macy’s, which has stores at South Coast Plaza. Both
shopping centers are home to May-owned Robinsons-May department
stores.
In a conference call Monday, Federated chief financial officer
Karen Hoguet said her company would not begin a two-year process of
changing stores’ names until next year.
Hoguet said there were few cases of geographic overlap, though
Newport-Mesa, not mentioned specifically by Hoguet, would be an
exception with two Robinsons-May stores competing with Federated
retailers.
Federated may sell stores in areas where the chains overlap,
Hoguet said.
“While it is too early to be specific, we are obviously looking at
store overlap for potential disposition, and we would expect there to
be some disposition,” she said.
South Coast Plaza spokeswoman Debra Gunn Downing said she could
not comment on the merger’s potential effects on the center because
the companies have not made any announcements specific to Costa Mesa.
Similarly, Bill Rams a spokesman for Fashion Island-owner the Irvine
Co., said it was too early to predict the deal’s impact on the
Newport Beach center.
In a statement, Federated chief executive officer Terry Lundgren
said his company would likely recast Robinsons-May stores into Macy’s
stores.
Under that scenario, closures of Robinsons-May stores would be
more likely, UC Irvine marketing professor Mary Gilly said.
“South Coast Plaza has both, so there would be no need to have
them there,” Gilly said.
The merger must be approved by the federal government and both
companies’ shareholders. Federated officials said they expect the
deal to become final in the third quarter of 2005.
* ANDREW EDWARDS
covers business and the environment. He can be reached at (714)
966-4624 or by e-mail at andrew.edwards @latimes.com.
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