Federated shaking up Atlanta market
By Clint Engel -- Furniture Today, January 27, 2003
Cincinnati — Federated Department Stores will close 11 full-line stores this year, two of them temporarily, eliminating more than 1,500 jobs and cutting net sales by about $100 million.
The move means big changes in the Atlanta market, where the company will consolidate its Rich's and Macy's stores under the Rich's-Macy's banner, while its upscale Bloomingdale's division enters the market with two stores.
Federated will deepen its commitment to home furnishings, with half of the dozen stores slated to open this year being furniture galleries or home stores.
In greater Atlanta, the company will close seven Macy's stores in April. Two of them, in Perimeter Mall and Lenox Square, will reopen later this year as Bloomingdale's, and one level of the closing Macy's store in Town Center at Cobb will reopen this fall as a Rich's-Macy's furniture gallery, the company said.
All told, 28 stores will be rebranded as Rich's-Macy's beginning Feb. 2, including the Macy's store at Northlake and all the Rich's units in Atlanta as well as Rich's in Birmingham, Ala.; Athens, Augusta, Columbus, Macon and Savannah, Ga.; and in Columbia and Greenville, S.C.
"By combining the strong regional expertise of Rich's with the powerful Macy's national brand, we will be giving Rich's-Macy's customers the best selection of fashion and value under one umbrella, while ensuring that we maintain community ties and preserve the special traditions of each," said James Zimmerman, Federated chairman and chief executive officer.
Still, the closings this year — including two Lazarus stores in Bloomington and Indianapolis, Ind., a Goldsmith's in Memphis, Tenn., and a Macy's East store in South Brunswick, N.J. — are expected to lead to one-time costs of about $115 million, in addition to the $100 million drop in net sales. Federated will take a $70 million charge in its fourth quarter related to the closings.
Federated also gave preliminary earnings guidance for fiscal 2003 of $3 to $3.20 per share — below previous analysts estimates — and said same-store sales are expected to be flat to down 1.5%.
Home furnishings, however, appear to be a bright spot. Of the 12 stores due to open this year, six will be home stores, which include textiles and other non-furniture merchandise, or furniture galleries.
In addition to the Rich's-Macy's furniture gallery opening in Atlanta, another will open in a former Macy's in Augusta, Ga. Bloomingdale's will open two Chicagoland home stores, and The Bon Marche and Macy's East will open furniture galleries in Tacoma, Wash., and on New York's Staten Island, respectively.
Federated's current 45 home and furniture gallery stores account for nearly 10% of its more than 460 stores in 34 states. The company's home and furniture business, including furniture departments in full-line stores, accounted for about 20% of total sales for the fiscal year ended Feb. 2, 2002, said Jean Coggan, Federated spokeswoman.
The company ranked No. 8 on Furniture/Today's list of the nation's Top 25 furniture retailers and was the largest department store retailer of furniture, with estimated furniture and bedding sales of $799.4 million for the latest fiscal year, down 8.2% from the previous year.
