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Macy's Bets Big on Martha Stewart

Carole Sloan -- Home Textiles Today, May 21, 2007

Macy's is placing significant emphasis on the upcoming exclusive Martha Stewart Collection to turn around its sluggish home business.

In addition to product, the Martha Stewart Collection represents "large amounts of marketing and presentation efforts and investment," said Terry Lundgren, president, chairman and ceo of Federated Department Stores, addressing the annual shareholders meeting here last Friday.

The slowdown in its home division "has had a significant impact" on the company's total business, which has not been robust. Home accounts for 15% of Federated's total revenues.

The home challenge has been felt in all divisions of the Macy's Group, but especially in the former May Company and Marshall Field's units. "We are counting on Martha Stewart; the price points are important and reachable" for all the company's divisions, he said.

And noting a major drop-off across the board in May and Marshall Field's traffic and business, Lundgren said, "In these markets it's an opportunity to acquaint customers with great new product."

Overall, Lundgren said, the biggest challenge facing Federated is the number and level of promotions at the May and Marshall Field's stores. "We pulled back promotions in the spring; there were more everyday values vs. their usual coupon promotions. The rate of change was too fast."

For fall 2007 the promotional activity will be closer to the levels of fall '06 for those stores. It will involve a change in mix of media to more public channels — newspapers, inserts, TV. "At Macy's we have a high penetration of charge-customer business; at May and Marshall Field's stores we have very low charge-customer activity," he noted.

As shareholders voted to approve the June 1 changeover of the corporate name from Federated to Macy's Inc., Lundgren commented that this move will only enhance the brand-building of the Macy's name and thereby, of the company's overall success.

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