May-Federated merger could add to overstock of space.

This article reports that the pending sale of Marshall Field's parent will unleash another wave of department store space on a market that's getting set to absorb the castoffs of Sears, Roebuck & Co. and Kmart Holding Corp. and still sopping up leftovers from Montgomery Ward, the Chicago, Illinois retailer that closed 250 stores when it went bankrupt in 2001. Analysts estimate that Federated Department Stores Inc. will close 75 to 100 stores nationwide starting next year, shedding underperformers and locations in places where Federated stores overlap with those of Field's parent, May Department Stores Co., which Federated aims to acquire for $17 billion. Wall Street has latched onto the notion that while department stores may be retail dinosaurs, they are sitting on a heap of valuable property. Such thinking drove up the shares of Kmart, spurred Kmart's imminent $11-billion acquisition of Sears and prompted an investor group to pay Target Corp. more than $1 billion last year for 257 Mervyn's department stores.