What's on sale? The store.

The main thing being sold at department stores these days is the store. Federated Department Stores, which just bought the May Company, has announced that it is selling off the Lord & Taylor portion of May.

"After a thorough review, we have concluded that Lord & Taylor does not fit with our strategic focus for building the Macy's and Bloomingdale's national brands," said Terry J. Lundgren, Federated's chairman, president and CEO, in a statement. "However, Lord & Taylor is a niche specialty retailer with a great name, many outstanding locations, an experienced management team and a strong customer following that makes it a desirable business."

Right -- it's such a great business you're trying to get rid of it.

Meanwhile Saks has put their Parisian chain up for sale.

The question is: How many departments stores can be up for sale at any one time? There's a supply/demand issue here. Saks is putting Parisian up for sale right after selling their northern stores to Bon Ton and their other southern stores to Belks. Presumably Saks Fifth Avenue itself will go on the block soon after.

Are there that many buyers out there?

Second issue: How many upscale department stores can the market sustain? At present there are five chains -- Nordstrom, Neiman-Marcus, Bloomingdales, L&T, and SFA. All other retail categories are winnowing down to two:

• Home Depot/Lowes
• Best Buy/Circuit City
• Wal-Mart/Target
• Staples/Office Depot

Why should an investor be interested in buying Lord & Taylor or Saks Fifth Avenue, which are fourth and fifth in their category?