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A Merger's Ripple Effect

Department store buyout will be a job close-out

BY: | March 2006



Filene's. Marshall Field's. Hecht's. Dozens of department stores with these historic legacies are now emptying their shelves in last-ditch clearance sales, while others are preparing for a name change. It's the closing act of a corporate merger that may cost thousands of retail jobs in 19 states, while adding to vacancies in many suburban malls.

Federated Department Stores, which acquired the May Company's chain of department stores last August, plans on selling off 78 duplicative stores and converting the rest to the Macy's nameplate by this fall. Federated says that as many as 6,200 workers could be laid off as a result of store closures, but that many of those employees would be offered jobs at other locations.

The company also agreed to give first dibs on many soon-to-be vacant sites to competing department stores. That stipulation was negotiated by the attorneys general of California, Maryland, Massachusetts, New York and Pennsylvania, who were concerned about dwindling competition in the department store business.

The first fruits of that agreement came last month when Federated agreed to sell 10 stores in three states--Maryland, New Jersey and Pennsylvania--to Boscov's, a Pennsylvania-based department store chain. The fate of many other department stores, however, remains up in the air. In Boston, Federated is selling the famous downtown building that has housed Filene's since 1912. Mayor Tom Menino has said that he'd like to see a big-box retailer such as Target move in. But developers are reportedly more interested in converting Filene's into offices or luxury condos. "We've been following it," says Jessica Shumaker, spokesman for the Boston Redevelopment Authority, "but we can't get involved in a private sale."


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Christopher Swope
Christopher Swope

Christopher Swope was GOVERNING's executive editor.

E-mail: mailbox@governing.com
Twitter: @governing

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