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More Muscle for Macy’s: Federated Rebranding Builds $13.5B Chain

Federated Department Stores plans to change all its regional units to the Macy’s nameplate, leaving it with only Macy’s and Bloomingdale’s...

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Lundgren cited another key advantage to the Macy’s change over. When stores open in new markets, outside the reach of the regional operations, it makes sense to utilize the more widely recognized Macy’s name than any of the other names. “We really couldn’t grow Rich’s and Burdines,” outside their existing markets, Lundgren observed.

He said the strategy is to open between three and six department stores annually for the foreseeable future, and close a couple of stores each year.

A few years ago, Macy’s dropped its national catalogue. Asked if Federated might revisit the strategy now with the name getting rolled out, Lundgren flatly said, “No. [Catalogues] is not a growing channel for distribution. Consumers are more apt to respond to the macys.com business that has been growing nicely for us. That’s where I think the future is.”

In its second quarter ended July 31, Federated’s income dropped 35 percent to $78 million while there was a 3.3 percent sales gain. The company was cited by analysts as being a very well run, strategic company that takes market share from the competition, in part by elevating the merchandise with somewhat higher prices and more full-price selling, boosting private labels, and managing inventories well.

As Robert Buchanan of A.G. Edwards, wrote in his note at the time, “We like the job being done these days by Federated ceo Terry Lundgren.”
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