May Department Stores

Macy's Inc. said Wednesday that its second-quarter profit fell 77%, weighed down by its takeover of a rival, and warned that it would miss Wall Street expectations for the third quarter and the year. Net income declined to $74 million, or 16 cents a share, from $317 million, or 57 cents, a year earlier. Excluding May Department Stores takeover costs of $60 million, or 13 cents a share, the company earned 29 cents a share, compared with 33 cents in the 2006 second quarter.

May Department Stores Co. said Friday that Chairman and Chief Executive Gene Kahn had resigned, a step analysts said would help bring in new blood to revive the retailer's sales. The St. Louis-based owner of Robinsons-May said it would immediately begin searching for a successor, triggering a 4% jump in its share price. Its statement did not say why Kahn was leaving, but said John Dunham would become acting chairman and CEO, in addition to his current role as president.

There was a lot of hand-wringing at the mall Thursday. Macy's parent, Federated Department Stores Inc., reportedly is in talks to buy May Department Stores Co. -- a deal that, if completed, could wind up squeezing the wallets of Southland shopping-center owners, some apparel manufacturers and many media outlets. Cincinnati-based Federated has opened preliminary talks with executives at St. Louis-based May, the Wall Street Journal reported Thursday, citing unnamed sources.

May Department Stores Co.'s fiscal fourth-quarter earnings slid 20% on weaker sales at stores open at least a year, the retailer said Thursday as it continued searching for a new chief amid lingering reports it might be bought out by a rival. Falling short of Wall Street's expectations, St. Louis-based May, operator of Robinsons-May, said it earned $339 million, or $1.10 a share, for the three-month period ended Jan. 29. That compared with earnings of $425 million, or $1.38, a year earlier.

Merger talks between May Department Stores Co. and rival Federated Department Stores Inc. reportedly have ended after the two retailers could not agree on how much Federated would pay for May. Negotiations broke down last week between Cincinnati-based Federated -- owner of the Macy's and Bloomingdale's chains -- and St.

Would Macy's tell Gimbel's? Maybe. Except, as New Yorkers well know, Gimbel's isn't around to listen anymore. Neither, for that matter, is Bullock's or Broadway in Los Angeles. Or Wanamaker's in Philadelphia. Or J.L. Hudson in Detroit. Heading into the weekend, Federated Department Stores Inc. -- owner of the Macy's and Bloomingdale's chains -- looked to be in the final stages of its mating dance with May Department Stores Co.

Writing a new chapter for the retail history books, Federated Department Stores Inc. agreed Sunday to buy May Department Stores Co. in an $11-billion deal with potentially sweeping consequences for Southern California, people familiar with the negotiations said.

Southern California could be on the verge of becoming a big petri dish of retail experimentation. To avoid buyer's remorse, Federated Department Stores Inc., which announced its plans Monday to buy May Department Stores Co., would have to take a hard look at all of its real estate holdings and decide what to keep, what to switch and what to ditch.

Terry J. Lundgren is known as a deft merchandiser, a retail innovator and a student of changing shopping trends. But can he stop Federated Department Stores Inc. from just running in place? It's a bigger question than ever now that Federated is planning to buy May Department Stores Co. Lundgren, a 52-year-old Long Beach native, gets high marks from some observers for keeping Federated a relevant player in the department-store industry.

May Department Stores Co. quietly has tapped John Dunham as its chairman and chief executive in advance of the retailer's $11-billion acquisition by rival Federated Department Stores Inc. May's executive compensation and development committee also increased Dunham's annual base salary by $100,000 to $1.15 million, retroactive to when he assumed duties of acting chairman and CEO after the Jan. 14 resignation of Gene Kahn. Dunham, 58, already had been May's president.