Wednesday, November 09, 2005

Federated moves toward selling David's Bridal

Wendy Tanaka
Philadelphia Inquirer

Federated Department Stores Inc. said today the third-quarter revenue and earnings of its bridal group division, which includes Conshohocken-based David's Bridal, was "treated as a discontinued operation."

This is a preliminary step to selling the bridal group. In September, Federated, which also owns Macy's and Bloomingdale's, said it plans to sell the division next year.

Federated, of Cincinnati, did not break out sales and earnings for its bridal group. Last year, the division generated $704 million in sales.

Federated acquired David's Bridal as part of its $11 billion purchase of rival May Department Stores Co., of St. Louis, which was completed this year.

Besides 245 David's stores, including seven in the Philadelphia area, the bridal group has 454 After Hours Formalwear and 11 Priscilla of Boston stores.

2 comments:

  1. I never understood May's somewhat recent push into bridal and formalwear stores. It's not surprising that Federated wants to dump them as quickly as it can.

    The only big question left is what will happen to Lord & Taylor. I suppose we'll find out after Christmas.

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  2. To understand the logic of May’s foray into formalwear, you have to consider that previously many May stores sold bridal apparel. Bridalwear was a very glamorous business, and still is for retailers like Saks and Neiman Marcus, but May was getting squeezed by bridal shops on the high-end and new school bridal superstores like David’s Bridal on the lower end.

    Bridal superstores tend to very successful and profitable at the expense of department stores. Since the business was lucrative but vulnerable, May bought the “thorn in its side” and sought to put its remaining competitors (independent superstores and JCPenney primarily) out of the business. The acquisition of After Hours Formalwear and Priscilla of Boston are natural extensions. Priscilla is a little more upscale than David’s Bridal and After Hours captures the “other side of the wedding cake,” as it were.

    I think selling the Bridal Group is a stupid idea. If anything, it needs to be expanded. A strong network of bridal superstores to supplement the fashion business at Federated is an intriguing concept, especially since they worked really well for May’s business, with easy recommendations between the stores, which tended to be located near each other. After Hours are primarily mall-based (including, ironically, a location inside Belk SouthPark in Charlotte, opened before the May acquisition of After Hours) while David’s Bridal and Priscilla’s share an off-mall orientation.

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