Federated to streamline homeware business
Macy’s to centralise to drive sales
February 4 2004
Federated Department Stores is to streamline its homeware operations by centralising key functions.
The move will see buying, merchandising and marketing for 425 stores brought together. The new central office in New York will be responsible for textiles, tabletop, housewares and furniture lines in all Macy’s-branded stores.
The homeware operation was worth $2.6bn in 2003, around 20 per cent of total sales across the Macy’s divisions, which includes the Macy’s east and west coast department stores as well as regional chains Rich’s-Macy’s, Lazarus-Macy’s, Goldsmith’s-Macy’s, Bon-Macy’s and Burdines-Macy’s stores.
Federated’s Bloomingdale’s chain is not affected by the new move, which the US retailer said is “a further step toward reinventing the department store.”
The new Macy’s Home Store organisation, will be headed by Eric Salus, currently president of the Seattle-based Bon-Macy’s division.
Terry J. Lundgren, Federated’s chairman and chief executive said: “The primary driver behind this initiative is to accelerate sales by improving and further differentiating our home assortments.
“A more coordinated, centralized approach to home buying, merchandising and marketing will enable us to work more effectively with our vendors to better edit assortments, secure unique product and introduce newness that will excite our customers and further differentiate our offerings. This is the underlying platform of our strategy.
“This move is all about growing and building on what always has been a core business for Macy’s.”
Lundgren said the company will see cost reductions as a result of this move. Positions affected include merchandise managers, planning executives and assistants, buyers, assistant buyers and others. Some roles will be retained locally, some transferred to New York, and some eliminated.
Lundgren said the move does not herald similar changes in other merchandise categories. He said: “The home business is unique because it has much less seasonality and fewer regional differences than we experience in other categories.
“So, while centralisation makes sense in this area, we don’t believe the centralisation idea benefits our other merchandise categories. In fact, we consider that our current structure in other product categories – which allows us to respond to the local, regional and seasonal desires of our fashion-oriented customer – offers us a distinct competitive advantage against the national chains.”
Federated’s total sales for 2003 were $15.265 billion, down 1.1 percent on 2002. Same store annual sales were down 0.9 per cent. In the four weeks to January 31 total sales were up 5.1 per cent and same-store sales up 5.5 per cent.
Lundgren said January saw “improvement across all merchandise categories and all parts of the country, driven by a continued comeback in career apparel and accessories. While January is a clearance month, we believe the recent trend bodes well for the coming year.”
