May Department Stores Co. reportedly has suspended its search for a new chief executive as it continues merger talks with rival Federated Department Stores Inc.
The New York Times, citing unidentified executives close to St. Louis-based May, reported Tuesday that the operator of Lord & Taylor, Famous-Barr, The Jones Store, Filene’s and other regional department stores told a recruitment firm it hired to “put the search on the back burner” while it talks with Federated.
The Times said talks between May and Cincinnati-based Federated — owner of Macy’s and Bloomingdale’s chains — gained momentum last weekend. Citing one executive, the newspaper said May has been holding out for a price “north of $40 a share” while Federated indicated it wanted to pay in the mid-30s, though both sides in recent days indicated they’d be willing to compromise.
“Up until now, there’s been a lot of posturing,” the Times quoted one participant in the talks as saying. “This is the first time I’ve felt there’s a legitimate chance we will get across the finish line.”
May spokeswoman Sharon Bateman declined comment on Tuesday. A message was left with Federated by The Associated Press.
John Dunham has served as interim chief executive since Gene Kahn abruptly stepped down last month as chairman and CEO, just seven months after helping May acquire Target Corp.’s Marshall Field’s department stores and nine Mervyn sites for $3.24 billion. Many analysts said the price was too steep by several hundreds of millions of dollars. May beat out Federated in that bidding.
May lately has offered no public update on the search for a successor to Kahn, who analysts said had been criticized by people within the company for micromanaging the business and not developing a clear vision for the company.
Dunham has said only that an announcement on Kahn’s replacement would come when the board makes its decision. He gave no time frame.
Executives also have recently sidestepped questions about talks with Federated.
Some analysts have suggested that uniting two of the nation’s largest department store chains into a behemoth with nearly 1,000 stores would make sense, creating a more efficient operation better equipped to go up against discounters. Together, the companies also could wring savings out of their merged retail systems and buying clout, some analysts suggested.
Others questioned whether the two retailers would be a good fit, citing the belief that Federated may be more upscale and May always margin-oriented while lacking on the merchandising side.
May’s performance has lagged behind competitors like Federated and J.C. Penney Co. as it has failed to come up with a compelling merchandising vision under Kahn and consequently has resorted to aggressive price cutting to bring customers into the stores.
In the meantime, May said it has closed 25 of 32 underperforming Lord & Taylor stores it said it was jettisoning in 2003.