Macy's Home shift will hit in '05

Heath E. Combs, Michele SanFilippo, May 17, 2004

With a solid first quarter behind it, Federated Departments Stores believes it has a level of momentum that will run through the remainder of the year, according to Karen Hoguet, chief financial officer.

Speaking during the retailer's quarterly conference call last week, she also indicated that the full benefits of its streamlined Macy's Home buying division won't take hold until fall 2005.

Currently, more than 80 percent of the positions in the new division have been filled. She expects the division to be fully up and running by the middle of the third quarter.

"The centralized home store allows us, as a company, to act faster and be more decisive in trying to differentiate our assortments," explained Hoguet, adding that she doesn't anticipate much change in the 20 percent penetration of home on Federated's overall sales.

Nor does Federated plan to expand the home department's footprint, although the company may reallocate space within the department.

In addition, she said, beginning in 2005, Federated will invest "a good portion" of the capital expenditures it has been dedicating to its "reinvent" refurbishing program into the home department.

"Plans for that are still being developed," said Hoguet.

The biggest impact of the Macy's home reorganization is going to be better sales and gross margins, she said.

Hoguet emphasized that the reorganization is not an expense-reduction strategy, adding that any costs savings will be reinvested in the Macy's home operation. Specifically, she pointed to investments in sales specialists and stock-keeping functions.

"We are confident that we will be able to return Macy's to its historic position of strength in the home category and are completely focused on building the home department in our stores," she said.

Hoguet added that Bloomingdale's and Burdines experienced the highest sales increases during the first quarter, with improvement at the latter attributed to integration with the Macy's nameplate.

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