Changes in store

Crowds pass through Macy's in New York as shoppers hit the stores on one of the busiest days of the year Friday, Nov. 26, 2004.

The Associated Press
Published: Friday, January 21, 2005 at 6:01 a.m.
Last Modified: Thursday, January 20, 2005 at 11:00 p.m.
Achange at the top of May Department Stores Co., whether through a buyout by rival Federated or on its own, should help the struggling retailer right itself after about four years of stumbling with disappointing sales and profits.
Shares in May surged 9 percent Thursday after The Wall Street Journal, citing unidentified people familiar with the talks, reported that Federated Department Stores Inc. was negotiating to buy May and create a $30 billion company with 1,000 stores.
That news came less than a week after May's Chief Executive and Chairman Gene Kahn abruptly left on Friday. May shares have since gained 23 percent on renewed enthusiasm among investors that the St. Louis-based company - which operates 500 stores under such names as Lord & Taylor and Hecht's - is moving to reverse its fortunes.
''No matter what happens, May company will see big changes with a new chief who will try to revitalize the company, making it more contemporary and align it more with its customers,'' said Walter Loeb, who runs his own New York-based retail consulting firm. He envisions at the very least a much ''tighter'' operation.
Changes could range from infusing the company with young, talented merchandisers, who would help makes its store labels more fashion-forward and reducing its store count.
Kahn, who had been with May in various capacities since 1990, left the company seven months after helping May acquire Target Corp.'s more than five dozen Marshall Field's department stores and nine Mervyn sites for $3.24 billion - a price many analysts called too high. Kahn also had been criticized by people within the company for micromanaging the business and not developing a clear vision for the company, analysts said.
Discussions between Federated and May have been on and off for a couple of years, but Kahn's abrupt resignation could clear the way for an acquisition. Federated's spokeswoman Carol Sanger and May spokeswoman Sharon Bateman both declined to comment Thursday.
Previous discussions had been stalled over management concerns, and with no succession plan in place at May, Federated's chairman and CEO Terry Lundgren could head the combined entity without butting heads with Kahn.

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