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National Brand Expansion Strategy Brings Powerful Macy's Nameplate to Dozens of New Markets

From: ASAP

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Stores to Combine Macy's and Regional Nameplates Beginning August 1, Supported by New Central Marketing Function, Capital Investments

Federated Department Stores, Inc. (NYSE:FD)(PCX:FD) today announced a broad national strategy to more fully leverage its Macy's brand. The Macy's name will be coupled with all of the company's regional department store nameplates beginning August 1, and a new central marketing function, to be headed by a chief marketing officer for Federated, is being created to support the national Macy's branding strategy.

"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 J. Lundgren, Federated's president/chief executive officer. "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."

Effective August 1:

The Bon Marche will operate as The Bon-Macy's in its 48 store locations in Idaho, Montana, Oregon, Washington and Wyoming. The division will remain headquartered in Seattle, WA.

Lazarus will operate as Lazarus-Macy's in its 42 store locations in Ohio, Kentucky, Indiana, Pennsylvania and West Virginia.

Goldsmith's will operate as Goldsmith's-Macy's in its five store locations in Tennessee.

Effective February 1, 2004:

Burdines will operate as Burdines-Macy's in its 56 store locations throughout Florida. The division will remain headquartered in Miami. At the time of the integration, the Burdines organization will assume responsibility for the seven Macy's stores now operating in Florida. Details of this integration will be worked out over the next six to nine months.

Lundgren said today's announcement builds on the success of the Rich's-Macy's nameplate integration that was initiated earlier this year in Georgia, South Carolina and Alabama. "Our Atlanta customers have responded favorably to the integration of Rich's- Macy's, which further supports our decision to extend the rollout of the Macy's brand strategy to stores in our other regional markets on an expedited schedule," he said.

Capital Investments Back Strategy

As part of this Macy's branding strategy, Federated will be introducing new reinvent features aimed at making the shopping experience more convenient and enjoyable in five major regional markets this year. Some of these improvements include enhanced fitting room environments with waiting lounges, improved in-store signage, the introduction of automated price-check devices and upscale shopping carts in all stores, and the integration of plasma video screens in selected store locations.

In addition to Atlanta, markets slated to receive a share of the company's $100 million allocation of reinvent capital this year are Seattle, WA; Columbus and Cincinnati, OH; Pittsburgh, PA; and Memphis, TN. In 2004, reinvent capital will be concentrated on Burdines stores in Florida as they convert to their new nameplate. Reinvent capital is included in the company's $650 million annual capital expenditures budget.

Expenses related to today's announcement are expected to have no material financial impact on Federated.

Details of specific plans for store renovations and improvements in each of these markets are still being developed. These plans, including specific stores in each market that will be targeted for reinvent initiatives will be announced at a later date.

Following the nameplate conversions, customers in markets now served by The Bon Marche, Lazarus, Goldsmith's and Burdines will receive new credit cards that have the combined nameplates, and they will be able to use these new cards in any Macy's store in the country, or to purchase online at macys.com. Until then, current store credit cards will continue to be used.

Corporate Marketing Supports Brand

Supporting the national Macy's brand rollout will be a New York- based Federated Corporate Marketing function to be headed by Peter Sachse. Sachse has served as president and chief operating officer of The Bon Marche division since April 2001. He will become the company's chief marketing officer, relocating to New York and reporting to Lundgren, effective June 9. Joseph Feczko, executive vice president of Federated Marketing Services, will report to Sachse.

In his new role, Sachse, 45, will be responsible for overseeing all of Federated's corporate marketing initiatives, including development of the Macy's media campaign, which earlier this month was awarded to the Lowe advertising agency for the fall season.

Sachse began his retail career with Macy's in Kansas City in 1980. He was named division merchandise manager at Macy's Bullock's division in 1987 and in 1992 moved to Federated's Seattle-based Bon Marche division as senior vice president/general merchandise manager. In 1997, Sachse was named executive vice president/general merchandise manager at Federated's Macy's East division in New York where, in 1999, he was promoted to vice chair/director of stores. A native of Sheboygan, WI, Sachse is a finance graduate of the University of Wisconsin.

New President for The Bon Marche

Eric Salus, 49, will succeed Sachse as president and chief operating officer of The Bon Marche, effective June 9. Salus, who currently serves as executive vice president/general merchandise manager for Macy's East, will relocate to Seattle. In his new capacity, Salus will join with Daniel H. Edelman, chairman of the 48-store division, with stores in five northwestern states and annual sales of nearly $1 billion.

A native of St. Louis, Salus is a 1975 graduate of the University of Missouri with a degree in business and finance. He began his retail career in 1975 in the executive training program at Famous Barr in St. Louis. He became a buyer at Davison's in Atlanta in 1979, and two years later joined the Hecht Company in Washington, D.C. as an assistant store manager and then store manager. Salus was made divisional merchandise manager for housewares at May D&F in Colorado in 1985, and held positions of increasing responsibility in the merchandising function there and later at Foley's in Houston, where he was senior vice president/general merchandise manager for home from 1990-95, before leaving to become chief merchant and marketing executive of Dick's Sporting Goods stores. Salus joined Macy's in New York as executive vice president/home in 1997.

Federated, with corporate offices in Cincinnati and New York, is one of the nation's leading department store retailers, with annual sales of more than $15.4 billion. Federated currently operates more than 450 stores in 34 states, Guam and Puerto Rico, under the names of Macy's, Bloomingdale's, The Bon Marche, Burdines, Goldsmith's, Lazarus and Rich's-Macy's, as well as macys.com and Bloomingdale's By Mail.

This release contains certain forward-looking statements that reflect current views of the financial performance and other events of Federated. The words "may," "will," "could," "expect," "plan," "anticipate," "believe" and other similar expressions identify forward-looking statements. Any such forward-looking statements are subject to risks and uncertainties. Future results or outcomes could differ materially from current expectations because of a variety of factors that affect the company, including competitive pressures from specialty stores, general merchandise stores, manufacturers' outlets, off-price and discount stores, new and established forms of home shopping (including the Internet, mail-order catalogs and television) and general consumer spending levels, including the impact of the availability and level of consumer debt, the effect of weather, the possible effects of the recent SARS epidemic on the procurement of merchandise from non- U.S. sources and other factors identified in documents filed by the company with the SEC.

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