Rich's parent company mum on merger talks

CINCINNATI - Wall Street investors reacted cautiously Monday to reports that two of the nation&#39;s biggest department-store retailers, Federated Department Stores Inc. and May Department Stores Co., are discussing a possible merger. <br> <br> Shares of Cincinnati-based Federated, whose stores include Macy&#39;s, Bloomingdale&#39;s, Rich&#39;s and Lazarus, were down 31 cents to $43.16 in midday trading on the New York Stock Exchange. <br> <br> St-Louis-based May Stores&#39; shares fell 1 cent a share to $36.63. Its stores include Lord & Taylor, Foley&#39;s, Filene&#39;s, Strawbridge&#39;s and Hecht&#39;s. <br> <br> The Wall Street Journal reported Monday that the two retailers are involved in preliminary talks to discuss the possibility of a merger. Similar, prior talks between May and Federated have gone nowhere. <br> <br> The companies accounted for nearly $30 billion in sales last year -- Federated had sales of $15.6 billion while May sales were $14.2 billion. <br> <br> Federated spokeswoman Carol Sanger said her company does not discuss specific details of possible acquisitions. Sanger did, however, reiterate Federated&#39;s interest in acquiring other retailers as a trend of consolidation continues within the department store industry. <br> <br> Calls to May were not immediately returned. <br> <br> Department store sales have been hurt by discounters Wal-Mart, Target and others that serve cost-conscious shoppers. A merger of large retailers could drive down costs for shoppers and could increase their profits by allowing them to negotiate lower prices from vendors and other suppliers, retail industry analyst Kurt Barnard said. <br> <br> Stores of Federated and May are often anchors for shopping malls nationwide, drawing crowds that can help other stores as well. <br> <br> Barnard said that although a May-Federated merger would be a natural response to the competitive pressures from Wal-Mart and others, he considers it unlikely that such a merger could happen. <br> <br> Barnard said federal regulators might have second thoughts about allowing such a merger, which could squeeze competition in the department store business. <br> <br> There would also be tricky details for Federated and May to work out, including which company&#39;s board of directors and which one&#39;s chief executive officer would lead the surviving corporation, said Barnard, president of Barnard&#39;s Retail Trend Report of Upper Montclair, N.J. <br> <br> &#34;The obstacles to such a merger are really formidable,&#34; Barnard said. <br>

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