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Federated moves to centralize home

Carole Sloan -- Home Textiles Today, February 9, 2004

In a sweeping move that introduces central buying and merchandising to Federated Department Stores, the retailer last week announced the formation of the Macy's Home Store for all divisions except New York-based Bloomingdale's.

The move, according to Terry Lundgren, chairman, president and CEO, is intended "to strengthen the store's ability to execute and market home furnishings."

In home textiles, he noted, "There may in fact be less change. We've been tremendously successful with our designer brands and our own Hotel Collection. We will continue to strengthen those. We have the ability to sell fine linens."

As an example, he cited a Hotel Collection bed that sells for $1,200 to $1,500 for a queen. "We will add personnel, management and regional coordinators for home textiles. It is most important."

Lundgren explained, "In home furnishings, we have had excess inventory and not enough consumer demand. Our best successes across the board are where the product is more limited, with supply and demand in check with exclusives, high quality and product that is not readily available."

The total home furnishings sales for all Macy's named divisions in 2003 was $2.6 billion of the total corporation's $15.2 billion in sales.

"The primary driver," Lundgren said, "is to accelerate sales by improving and further differentiating our home assortments. A more coordinated central approach to home buying, merchandising and marketing will enable us to work more effectively with our vendors to better edit assortments, secure unique products and introduce newness that will excite our customers and further differentiate our offerings."

The move to centralize the home business, Lundgren explained, does not portend similar moves in other merchandised categories. "The home business is unique because it has much less seasonality and fewer regional differences than we experience in other merchandise categories."

The move brings Eric Salus, now president of Bon-Macy Seattle, back to New York as president of Macy's Home Store. Before joining Bon-Macy in May 2003, he was executive vice president of home at Macy's East. Salus reports to Lundgren.

James Gray, president of Macy's East will assist in developing the independent home organization, while retaining his position at Macy's East.

In identifying the roles of Federated Merchandising Group, headed by Janet Grove, vice chair, and the new Macy's Home Store organization, Lundgren said "FMG will sell to Salus' group. It will focus solely on product development. Today, they are also involved in vendor relations. Now that will be Salus' responsibility, and they will work side by side."

As for product development and the changes ahead, Lundgren said, "There will be one decision maker, not five (divisions) and they will know up front whether there is product needed for opening price points or higher end. The decision process will be faster, easier and clearer."

Within 60 days, Federated expects to have determined the personnel for the Home Store division. About 425 jobs across the company will be affected, including general, regional and divisional merchandise managers, planning executives and assistants, buyers, assistant buyers and clericals. To be determined is how many jobs will be eliminated, and which will become part of the new Home Store organization.

"While not completely defined," Lundgren explained, "there could be regional merchandise managers, who have the knowledge of a division-specific need, and who could work on assortments by store."

"The move to the Macy's Home Store organization will allow the company to provide more attention to the in-store shopping experience," he said. To date, the company has moved to larger dressing rooms, shopping buggies and price checks. "We hope to have a price lookup system in place for home by fall."

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