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Federated pulls it together

Gary Evans, Andrea Lillo -- Home Textiles Today, May 27, 2003

New York — The integration of the Macy's banner to Federated Dept. Stores' remaining regional chains, announced last week, is the next logical step in bringing a more uniform and cohesive stance to the company while leveraging a single brand to a national audience.

The strategy builds on the Rich's-Macy's nameplate integration initiated earlier this year, the success of which allowed the company to step up its plans to incorporate the other department store divisions. It also makes sense in an industry that continues to consolidate.

"By layering the powerful Macy's national brand onto Federated's strong divisional operations and regional nameplates — The Bon Marche, Burdines, Lazarus and Goldsmith's — we not only will be able to fully capitalize nationally on the powerful Macy's brand for the first time, but we will be able to operate more efficiently as a company," said Terry Lundgren, president and ceo. "This will be very positive and exciting for customers who will be able to experience the best of both Macy's and their favorite regional stores in each of our markets across the country."

Since the combination of the Macy's and Rich's brands in Atlanta, that segment of the division was running ahead of the results produced by the Goldsmith's-Lazarus segment, Terry Lundgren, president and ceo, told reporters after the recent annual meeting.

"It's the best of both worlds, and it appears to be working," he said, declining to specify if or how long the Rich's nameplate would remain over the doors, though he added at the time that the company was open to making future changes, perhaps evolving the brand further.

Further unifying functions, the company also announced last week the creation of a central corporate marketing function based in New York to support the Macy's brand rollout.

Effective Aug. 1, The Bon Marche, with 48 locations in the Pacific Northwest, will operate at The Bon-Macy's, and Lazarus, with 42 locations in Ohio, Kentucky, Indiana, Pennsylvania and West Virginia, as Lazarus-Macy's. Goldsmith's will be known as Goldsmith's-Macy's in its five Tennessee locations.

And come Feb. 1, 2004, Burdines will do business as Burdines-Macys in its 56 locations in Florida. Details of this integration will be worked out over the next six to nine months.

"It's the best of both worlds and allows us to bring the Macy's name into all markets," said Carol Sanger, vp, corporate communications, allowing the retailer to realize extra efficiencies and advertise nationally. She added that Macy's merchandise will eventually hit the regional chains, though she was unsure of the timing. Though the regionals do a small portion of unique buying, Federated Merchandising Group is the "editing point for the company," and there are no plans for that to change, she said.

The company plans to spend $100 million of "reinvent capital" to incorporate these new nameplate changes as well as store environment alterations, such as improved store-signage, waiting lounges in fitting rooms and automated price-check devices, in selected store locations. In addition to Atlanta, markets slated to receive a share of this allocation are Seattle; Columbus, OH; Cincinnati; Pittsburgh; and Memphis, TN. In 2004, reinvent capital will be concentrated on the Burdines stores as they are converted.

Specific plans for store plans and improvements are still being developed. After the conversions, customers will receive new credit cards, usable in any Macy's location nationwide.

Supporting this initiative will be the creation of a New York-based Federated Corporate Marketing function to be headed by Peter Sachse, who has served as president and coo of The Bon Marche since April 2001. Sachse will become the chief marketing officer, relocating here and reporting to Lundgren, effective June 9. He will be responsible for Macy's media campaign, which earlier this month was awarded to the Lowe advertising agency for the fall season. Joseph Feczko, evp of Federated Marketing Services, will report to Sachse.

In addition, Eric Salus, evp/gmm for Macy's East, will succeed Sachse as president and coo of The Bon Marche, and will relocate to Seattle.

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