Federated Department Stores Inc. (FD) Thursday put its 55-store Lord & Taylor chain up for sale so it can focus on building its Macy's and Bloomingdale's brands.

The retailer, which acquired the Lord & Taylor chain when it bought May Department Stores last year, said it will classify the chain as a discontinued operation, reducing fourth-quarter income from continuing operations by about 10 cents per share.

The company said it expects to complete the transaction before the end of 2006.

The chain generated 2004 sales of $1.6 billion.

Federated is putting a Macy's nameplate on other stores it acquired in the May deal such as Marshall Field's, but conspicuously left Lord & Taylor out of those plans, leading analysts to believe the chain would be sold.

In a research note released Thursday, Citigroup analyst Deborah Weinswig said among her 2006 predictions that upscale retailer Saks Inc. would be taken private and combined with Lord & Taylor.

Private equity firms have been snapping up retailers in recent years, attracted by valuable real estate portfolios and the prospect of turning around underperforming companies and selling them at a premium.

Goldman Sachs and JPMorgan Chase are advising Federated, whose shares were up $1.51, or 2.11 percent, at $73.14 on the New York Stock Exchange.