The future of Lord & Taylor, the upscale department store that catered to the carriage trade in its heyday but has more recently fallen on hard times, remained uncertain yesterday, following an announcement that did little to quell speculation that the business could soon be for sale.
Federated Department Stores will inherit Lord & Taylor as part of its acquisition of the May Department Stores Company, a deal that has kept Seventh Avenue tongues wagging over the future of the various chains within the May empire.
Some of those rumors were set to rest yesterday, when Federated announced plans to convert 330 of May's regional department stores, names like Famous-Barr, Filene's and Foley's, to its Macy's brand.
A further 68 stores, including 41 May stores and 27 Federated stores, will be sold to eliminate overlapping locations in the same malls.
Still under consideration is what to do with Marshall Field's, the upscale department store that May acquired in June 2004, which has a strong presence in the Midwest.
Of Lord & Taylor, which operates mainly in the Northeast, Federated said only that it had no plans to convert it to the Macy's brand, essentially leaving open other possibilities that include a partial or full-scale sale of the division.
Lord & Taylor is in the fifth year of a turnaround under Chief Executive Jane Elfers that has attempted to regain some of the brand's polished image. Middle market labels like Liz Claiborne have been dropped in favor of more upscale, edgier names like Nanette Lepore and the company has closed laggard stores.
Analysts said the real test of the turnaround will come this fall, the first time a year-over-year sales comparison can be made of the newly formulated merchandise.
Some observers remain skeptical that the changes will do much to halt the long-term slide of the brand.
"What does Lord & Taylor mean today?" said Dana Cohen, an analyst with Banc of America Securities. "It doesn't have the power and cachet it once did."
Nor does it have the earnings power of other May Company divisions. Cohen estimates that Lord & Taylor's operating margins are half those of its corporate parent.
If Lord & Taylor's turnaround has been slow in coming, much of the blame rests with Gene Kahn, May's former CEO, who resigned in January, industry observers said.
"Lord & Taylor needed a facelift and that costs money," said Harry Bernard of Colton Bernard. "Jane was fighting an uphill battle, and she got no corporate support."
Jim Sluzewski, a Federated spokesman, would say only that the company is continuing to study Lord & Taylor.