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Federated Internet

From: ASAP


Federated Department Stores, Inc. (NYSE:FD)(PCX:FD) today announced plans to tighten its Internet focus by reducing the e-commerce offering on the bloomingdales.com website and directing its future online resources to macys.com.

Federated said that effective February 1, 2002: -- bloomingdales.com will transition from an online e- commerce site to primarily a marketing site that supports the Bloomingdale's store brand. Online services of the bloomingdales.com bridal registry will be maintained in partnership with WeddingChannel.com and the site will continue to offer electronic order forms for purchasing from the Bloomingdale's By Mail catalog. -- macys.com will scale back the scope of its online merchandise offerings, eliminating such ready-to-wear categories as petites, larger sizes, career and swimwear, while expanding its selections in successful online categories such as bridal, home, gifts and jewelry, which have proven most popular with macys.com customers. The Macy's catalog operation, which primarily has served as a marketing vehicle for macys.com, will cease operations entirely.

"Over the past three years, Federated has been aggressively pursuing strategies to capitalize on two of the strongest names in retail -- Macy's and Bloomingdale's," said James M. Zimmerman, Federated's chairman and chief executive officer. "We are pleased with our progress and we have learned a lot in that process as a result of the efforts of a number of very talented, dedicated people in the direct-to-customer part of our business. We remain committed to pursuing our Internet strategies."

"In the current economic climate, it is important that we use our available resources in the most productive way possible," said Jeffrey Sherman, chairman of Federated Direct, the company's direct-to-customer division headquartered in New York. "We are looking forward to building on the successes of macys.com while more aggressively pursuing Internet marketing opportunities for Bloomingdale's."

Approximately 100 positions will be eliminated as part of the reorganization. These positions include technical support and programming personnel, in addition to merchandising and administrative staff. Personnel in positions impacted by today's announcement will be offered severance, health care continuation and outplacement services, and will be given priority hiring status for any open positions in other Federated operations in their areas.

Sherman said the decision will reduce the expected loss from these businesses, as well as the amount of capital expenditures required, keeping them on track to break even in 2003 as was originally anticipated.

One-time costs associated with the reorganization of Federated's direct-to-customer segment are expected to be in the range of $50- 60 million, to be booked in the fourth quarter of fiscal 2001. Included in that estimate is approximately $40 million for the non-cash write down of the fixed assets and software capitalization associated with the sites.

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