Federated Department Stores
agreed Thursday a deal to sell its Lord & Taylor department store chain to a real estate investment partnership for $1.2 billion in cash.
Lord & Taylor was acquired by NRDC Equity Partners LLC, a partnership between Apollo Real Estate Advisors L.P. and National Realty & Development Corp. Federated, which also operates Bloomingdale's and Macy's, expects the deal to close in the third quarter.
Lord & Taylor, which Federated acquired when it bought its rival May Department Stores last year, includes 48 stores and a distribution center in Wilkes-Barre, Pa. Federated announced plans to sell the business in January.
"This agreement concludes a successful process to divest Lord & Taylor," said Federated in a press release. "While Lord & Taylor does not fit with Federated's strategic focus on building the nationwide Macy's and Bloomingdale's brands, it is a well-known niche specialty retailer with a great name, many outstanding locations and an experienced management team."
NRDC, along with Apollo, acquired
Linens 'n Things
in February. In its own release, the firm said its deal for Lord & Taylor, ""furthers NRDC's strategy of acquiring great companies that have a strong brand and a valuable real estate platform."
The firm said Lord & Taylor's real estate portfolio is being reviewed, and it has made no decisions about whether it will sell off individual stores or not. It plans to run the chain as a specialty department-store business and keep its management team, including CEO Jane Elfers, in place.
Elfers was named CEO at Lord & Taylor in 2000. Three years later, amid rising competitive pressures, she started a restructuring process that purged the chain of 32 underperforming stores and tried to remake its brand with new, trendier products. The effort yielded mixed results.
Shares of Federated were recently up 25 cents, or 0.7%, to $36.05.