Well, I wondered if something like this would happen. No retailer in the history of the world has ever prospered by enraging as many of its customers as Federated has over the last year or so. There is no reason to believe that Federated will be an exception. Now well-known "corporate raider" Carl Icahn has notified Federated that he "plans a filing under the Hart-Scott-Rodino Antitrust Improvements Act for clearance to acquire $113.4 million to $500 million of additional shares in Federated."
What does this mean? I'm certainly no expert on these things. (If you are, I'd love to hear your take.) Maybe it doesn't mean squat. He isn't obligated to follow through with his plan to obtain 5% of the corporation, much less obtain a controlling interest. But if Carl Icahn is trying to gain control of Federated, it isn't because he thinks Federated's management is doing a wonderful job. This is a man who became the 24th richest man in the country by figuring out which corporations are run by fools and self-dealers and moving in on them. Now it looks like he may be gearing up to tap Federated for that honor.
Loyal Right Coast readers know that I (not to mention thousands of other Marshall Field's shoppers) have been horrified by Federated's transformation of the profitable Marshall Field's into just another part of Macy's. The transformation of Field's State Street Store--Chicago's grand cathedral of commerce--into a Macy's is especially dismaying. Field's and Macy's are simply not equivalent--not in quality or in historic importance. And certainly not in the hearts of Chicagoans and other Midwesterners. I was also puzzled as to how Federated could hope to prosper by turning nearly every department store chain in the country into a Macy's--Filene's, Hecht's, Foley's, Robinsons-May, Famous-Barr and others, just in this latest round--even when it would mean that many malls across the country would have two Macy's. As the Wall Street Journal reported it, Federated didn't seem to think this might be a problem.
I suppose it's possible that Carl Icahn is aware of the protests against the Macy-fication of Chicago, aware of the huge number of customers who have returned their shredded new Macy's cards to Federated, aware of the turmoil within Federated, aware of the empirical evidence that previously-loyal customers are staying away even in markets like Memphis, Atlanta, Seattle and Columbus where Macy-fication had been thought to have been successful, and aware of CEO Terry Lundgren's reputation for being ... well ... uh ... thick-headed and ego-driven.
One thing is for certain. Icahn has a reputation for buying up companies and forcing them to sell off underperforming assets. That's what he does. Here's hoping he bundles the now-dormant Marshall Field's trademark, the leases on the former Marshall Field's stores and other Marshall Field's related assets and sell them to a retailing concern capable of restoring Marshall Field's (instead of just selling off the State Street real estate). If he does that, he'll certainly be my white knight.
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Tom Smith