Chico's, Nordstrom and Kohl's Could See Biggest Benefits NEW YORK, May 31 /PRNewswire/ -- Federated Department Stores' (NYSE: FD; $72) aggressive timeline for converting its recently acquired May's department stores into Macy's could create opportunities for competitors to gain market share during this summer and back-to-school season, according to Standard & Poor's Equity Research Services. These and other findings are available in two semi-annual reports on the retail industry, Apparel & Footwear Industry Survey and Retailing: General Industry Survey, published by Standard & Poor's, a leading provider of independent investment research. With a September deadline to convert about 400 stores acquired as part of the May acquisition to Macy's, Federated faces a number of operational, customer service and execution risks, by S&P's analysis. Additionally, Federated's focus on the conversions could negatively impact the company's merchandising efforts and cause it to resort to discounting merchandise to entice shoppers and meet sales targets. Standard & Poor's Equity Research has a "Hold" (3-STARS out of 5) recommendation on the stock partly because of these risks. "As business in former May stores becomes disrupted during merchandise changes and renovations this summer, we think Federated may lose some sales to competitors, particularly if shoppers are disappointed by new assortments or alienated via unfocused or under-trained staff," says Jason Asaeda, General Merchandise Stores Analyst, Standard & Poor's Equity Research Services. "Shoppers may choose stores that are more familiar and attentive. If that occurs, Federated may have to use discounts to lure customers back into its stores, which we view as a worst-case scenario." Standard & Poor's Equity Research Services believes that Nordstrom (NYSE: JWN; $36) could be one of the primary beneficiaries of the issues facing Federated because of its strong customer service reputation and its focus on the luxury market and affluent shoppers. Standard & Poor's Equity Research Services has a "Buy" (4-STARS) recommendation on Nordstrom. Standard & Poor's Equity Research also has a "Buy" (4-STARS) recommendation on Kohl's (NYSE: KSS; $54) because of its continuing efforts to inject newness and higher quality into its assortments, and in the process, broaden its customer base. Chico's (NYSE: CHS; $30; 5-STARS) is a third company that could benefit from potential issues at Federated, in Standard & Poor's view, because of its reputation for strong customer service, its fashion sense and the continued rollout of its Soma line of intimate apparel. "Federated already faces competition on multiple fronts from specialty retailers, mass market department stores and purveyors of luxury goods. If Federated's customers experience service disruptions or fail to be impressed by the summer and fall offerings, then other retailers have the opportunity to improve their market share," opines Marie Driscoll, Group Head, Consumer Discretionary - Retail, Standard & Poor's Equity Research. "Most retailers use the back-to-school season as a precursor for the holiday season, so a bad back to school could domino into a poor holiday showing. Retailers, like Nordstrom and Chico's, with strong reputations for customer service could benefit the most from the changes at Federated." To view a video clip of Standard & Poor's equity analyst Jason Asaeda discussing the sector, please click here: mms://wmd31sea.activate.net/sandp/windows/sptv-survey-30.wmv Standard & Poor's Industry Surveys provide a broad and fundamental overview of each industry's structure, its recent performance, and an analysis of trends that are expected to influence it in the future. Each Survey is organized into the following sections: Current Environment, Industry Profile/Industry Trends, How the Industry Operates, Key Industry Ratios and Statistics, How to Analyze a Company, Industry References, Comparative Company Analysis, and a Glossary of terms used in that industry. Both text and data are provided, as are references to additional sources of industry information. Two surveys on each industry are published each year. Readers can purchase Standard & Poor's Industry Surveys three ways: Online for immediate download at http://sandp.ecnext.com/, by telephone at 212-438-4052, or via e-mail order sent to . Members of the media can request a copy from the communications contact listed at the end of this release. The analysts quoted above are Standard & Poor's equity analysts. They have no affiliation with any companies they cover, nor any ownership interest in any companies they cover. About Standard & Poor's Equity Research Services As the world's largest producer of independent equity research, over 1,000 institutions license Standard & Poor's research for their investors and advisors, including 19 of the top 20 securities firms, 13 of the top 20 banks, and 11 of the top 20 life insurance companies. Standard & Poor's team of 120 experienced U.S., European and Asian equity analysts use a fundamental, bottom-up approach to assess a global universe of approximately 2,000 equities across more than 120 industries worldwide. Follow Standard & Poor's equity analysts' U.S. market commentary each day at http://www.equityresearch.standardandpoors.com/. The equity research reports and recommendations provided by Standard & Poor's Equity Research Services are performed separately from any other analytic activity of Standard & Poor's. Standard & Poor's Equity Research Services has no access to non-public information received by other units of Standard & Poor's. Standard & Poor's does not trade on its own account. The analytical and ethical conduct of Standard & Poor's equity analysts is governed by the firm's Research Objectivity Policy, a copy of which may also be found at http://www.standardandpoors.com/. About Standard & Poor's Standard & Poor's, a division of The McGraw-Hill Companies (NYSE:MHP), is the world's foremost provider of independent credit ratings, indices, risk evaluation, investment research and data. With approximately 6,300 employees located in 21 countries and markets, Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit http://www.standardandpoors.com/. DATASOURCE: Standard & Poor's CONTACT: Ed Sweeney Communications Tel.: +1-212-438-6634 Web site: http://www.standardandpoors.com/ mms://wmd31sea.activate.net/sandp/windows/sptv-survey-30.wmv http://sandp.ecnext.com/ http://www.equityresearch.standardandpoors.com/

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