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Federated Stores may idle 6,200

Company to sell bridal division; job cuts won't hit workers in Utah

Federated Department Stores Inc. announced Tuesday it may cut up to 6,200 jobs next year and will put its newly acquired bridal division on the block as part of a streamlining strategy following its takeover of Meier & Frank parent company May Department Stores Co.

None of the job cuts announced Tuesday will affect retail store employees, including those in Utah, Federated spokeswoman Sharon Bateman said Tuesday.

Rather, she said, the cuts will include 1,700 jobs at the former May Co. corporate offices in St. Louis and another 4,500 at May's divisional operations in Boston, Houston, Arlington, Va., and Los Angeles. The corporate reductions will begin in March 2006. Most should be complete by year's end.

"The associates in our stores should not be affected by this announcement," Bateman said. "The affected group at Robinsons-May (which included Meier & Frank) is the Robinsons-May central office in California. But in the stores, no, there shouldn't be any change."

Where possible, May corporate employees will be offered positions elsewhere in the Federated system, the company said. Others will receive severance packages.

All store operations should remain unchanged through the 2005 holiday shopping season, Federated said.

The Cincinnati-based retail giant completed its $11.9 billion purchase of May Department Stores in August, which resulted in a combined entity of more than 244,000 employees, 1,000 stores and $30 billion in annual sales. May operated eight Meier & Frank stores and one David's Bridal store in Utah.

As part of Tuesday's announcement, Federated said it intends to sell its Philadelphia-based bridal group, which includes 245 David's Bridal stores, 454 After Hours Formalwear stores and 11 Priscilla of Boston stores in 47 states and Puerto Rico.

"While the bridal group is a very successful, profitable business with significant growth opportunities, its specialty store model does not fit with Federated's strategy of focusing on department stores and building the Macy's and Bloomingdale's brands," Terry J. Lundgren, Federated's chairman, president and chief executive officer, said in a prepared statement. "We expect to thoroughly evaluate strategic alternatives and expect to complete a sale of this business sometime in 2006."

The realignment plans announced Tuesday "are consistent with Federated's previously announced estimates to realize approximately $175 million in cost synergies in 2006 and $450 million in annual cost synergies in 2007 and beyond," the company stated.

So far, Federated has announced it will eliminate 11 May "nameplates," including Meier & Frank. On Tuesday, after some deliberation, Federated said May's much-beloved Marshall Fields brand will be folded under the broader Macy's name. There are 62 Marshall Field's locations throughout the Midwest. The company is still studying what to do with its Lord & Taylor division.

"To better serve our customers in this highly competitive retailing environment, we must concentrate on our best national brands and reduce costs so we can deliver outstanding value to shoppers," Lundgren stated. "We believe that continuing to build Macy's and Bloomingdale's aggressively across America will accelerate our comp store sales performance and increase profitability, thereby driving shareholder value."

For customers, the merger will mean upgraded stores for some, Bateman said, though perhaps not for the downtown Salt Lake store, which recently completed a multimillion-dollar renovation.

"There will be changes in the stores, but mostly it's in the name change to the Macy's brand in the fall of 2006," Bateman said. "Once Federated starts buying merchandise for the stores, customers will have the benefit of access to the great Macy's private labels.

"Today's announcement of the realignment is just part of the strategic plan Federated has to build the Macy's brand nationwide. It is a good step in retailing, we think."

The moves are a logical extension of Federated's strategy, said Michael Appel of Quest Turnaround Advisors, a turnaround management and advisory firm in Purchase, N.Y. "Macy's nameplate is going to take over, and they are streamlining the old divisional operations of the May company and putting them under the Macy's umbrella."

Kurt Barnard, of Barnard's Retail Consulting Group in Nutley, N.J., said the moves should be good for customers.

"The job cuts and nameplate changes will help keep prices down," said Barnard. "The job cuts will trim costs, and changing Marshall Field's to the Macy's nameplate also should save in advertising and in negotiating with vendors."

On a side note, Federated spokesman Jim Sluzewski said Tuesday the company isn't anticipating any problems in Utah resulting from the similarity between the Macy's brand for its department stores and locally operated grocery stores named Macey's.

"We're in different categories, so I don't think it will be a matter of concern," Sluzewski said.

Federated stock fell 94 cents, or 1.4 percent, to close at $64.76 Tuesday on the New York Stock Exchange. The company's stock has traded between $44.39 and $78.05 in the past year.


Contributing: The Associated Press

E-mail: jnii@desnews.com