Blog: Leonie BarrieMerger mania

Leonie Barrie | 3 March 2005

The merger of Federated Department Stores Inc and May Department Stores Co is good news for shoppers, but could well spell trouble for some apparel suppliers analysts are saying. The long-anticipated $11 billion deal will create the US’s fourth-largest retailer with nearly 1,000 stores and $30 billion in annual sales – giving the combined entity considerable clout and squeezing power when it comes to negotiating with its vendors. Store closures tied to the merger could also hurt volume. Some of the most exposed, and high profile names include Liz Claiborne Inc, which generates around 25 per cent of its annual revenue from the two department stores, and Jones Apparel Group for which Federated and May account for roughly one-quarter of revenue.

However, the promised mix of more unique brands, less clutter and cost savings from buying in greater bulk should lead to better deals for customers – which could, in turn, have knock-on benefits for suppliers. Federated chairman and chief executive Terry Lundgren says nationally known vendors will continue to be important to the new business. “Customers have clearly said what they like about our shopping experience is they like our brands. The merger will give us an opportunity to work closely with our brand partners and continue to grow our business with them.”

On the private-label side, Lundgren says Federated and May will hold a "style-out," pitting Federated's private-label brands against those of May. Here, though, Federated and May mainly use their own merchandising teams and Hong Kong buying offices.


BLOG

Trump and Brexit generate more confusion

Over the past month, Donald Trump and his team failed to offer any clear plan to ensure Americans would "Buy American, Hire American" - while the British government's attempts to clarify the specifics...

BLOG

Bangladesh works to resolve labour activist issues

The Bangladesh government was forced to respond late last week to pressure over its crackdown on labour activists after a number of global brands and retailers, including H&M and Inditex announced pla...

BLOG

US border tax a contentious issue

Fresh from their disappointment at seeing the Trans-Pacific Partnership (TPP) free trade deal abandoned last month with an executive order by President Donald Trump, the US apparel and footwear sector...

BLOG

Primark's sustainable cotton programme takes shape

With the ultimate aim of ensuring all the cotton in its products is sourced sustainably, value clothing retailer Primark is adamant that having a business model focused on offering the lowest prices o...

just-style homepage



Forgot your password?