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Federated to Add Macy's Name to Stores

The company's best-known brand will be combined with its regional chains to coincide with a new marketing campaign.

May 23, 2003|From Bloomberg News

Federated Department Stores Inc. said Thursday that it would add the Macy's name to the company's regional chains as the retailer attempts to use its best-known brand to revive sales.

The name changes at the Bon Marche, Burdines, Lazarus and Goldsmith's chains, scheduled to begin in August, will coincide with a national advertising campaign and $100 million in renovations. By combining the names, Cincinnati-based Federated will be able to expand Macy's to new markets while retaining local shoppers, spokeswoman Carol Sanger said.

Sales have slumped in 12 of the last 13 quarters as discount retailers such as Kohl's Corp. sell more fashionable merchandise.

Chief Executive Terry Lundgren has been widening aisles, adding shopping carts and replacing merchandise to lure back customers.

Federated may be preparing to drop the names of the regional chains to establish a stronger national identity, analysts said.

"We are going to see a transition period for people to get used to the name Macy's," said Kurt Barnard, president of Barnard's Retail Consulting Group. "Gradually, the other names will fall away."

R.H. Macy & Co., the longtime sponsor of the annual Thanksgiving Day parade in New York, was acquired by Federated in 1994. The chain is the company's largest by revenue. Bloomingdale's is its other national department-store chain.

Federated changed its Rich's stores in Georgia, South Carolina and Alabama to Rich's-Macy's this year.

The name changes may spell the end of some of the oldest regional retailers in the U.S., analysts said. Lazarus was founded in Columbus, Ohio, in 1851; Goldsmith's was established in Memphis, Tenn., in 1870; Bon Marche in Seattle in 1890 and Burdines in Miami in 1898.

Federated shares rose 82 cents to $31.30 on the New York Stock Exchange. They had dropped 25% in the last year.

The company hired Interpublic Group of Cos.' Lowe & Partners Worldwide this month to create the first national marketing campaign for Macy's.

Peter Sachse, president of the Bon Marche division, will become chief marketing officer June 9, Federated said. Sachse, 45, will oversee the campaign designed by Lowe.

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