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Federated to Cut 1,100 Workers in L.A. Area

Nationally, 6,200 jobs will be trimmed as the company phases out its Robinsons-May stores.

September 21, 2005|Leslie Earnest | Times Staff Writer

Federated Department Stores Inc. said Tuesday that it would cut more than 1,100 positions in North Hollywood as it phases out the Robinsons-May division, ending an era when Los Angeles County was a retail headquarters hub.

The job cuts were among 6,200 announced by Federated, the first since it completed its $11-billion purchase of May Department Stores Co. on Aug. 30.

For The Record
Los Angeles Times Saturday September 24, 2005 Home Edition Main News Part A Page 2 National Desk 1 inches; 36 words Type of Material: Correction
Federated job cuts -- An article in Wednesday's Business section about job cuts by Federated Department Stores Inc. transposed the locations of two defunct retail chains. Henshey's was based in Santa Monica and Hinshaws in Whittier.

A "good number" of the affected employees, who work in regional division offices and May's former St. Louis headquarters, are expected to take other jobs within the company, spokeswoman Carol Sanger said.

Cincinnati-based Federated also operates the Macy's and Bloomingdale's chains.

No employees will lose their jobs before March 1, and stores will continue operating as usual through the holiday shopping season, the company said.

Federated also said Tuesday that it would sell the bridal group division it acquired from May, which in California operates 25 David's Bridal stores and 62 After Hours Formalwear sites.

The bridal group is profitable and has "significant growth opportunities," Federated Chief Executive Terry J. Lundgren said in a statement. But it does not "fit with Federated's strategy of focusing on department stores and building the Macy's and Bloomingdale's brands."

The company further announced that it would convert all 62 of its Marshall Field's stores to the Macy's nameplate in fall 2006. Ultimately, Federated will operate 850 Macy's stores and 40 Bloomingdale's locations.

Locally, Federated said, it will replace Robinsons-May sites with Bloomingdale's stores at South Coast Plaza in Costa Mesa and Fashion Valley Center in San Diego.

Although Southern California's economy is growing, the job losses are a blow, said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp.

"It's always a disappointment when you have any number of jobs leaving, and 1,136 is a sizable chunk," he said.

Further, the loss of the Robinsons-May/Meier & Frank division marks the end of an era when the Los Angeles area was home to some of the biggest names in retail, Kyser said.

Large companies that once had area headquarters included J.W. Robinsons, May Co., Broadway and Bullocks, he said. Smaller players included Buffums in Long Beach, Hinshaws in Santa Monica, Ivars in Highland Park and Henshey's in Whittier.

"You had the big department stores and the smaller chains, but they were all headquartered here," Kyser said. "It's the further homogenization, the loss of local character and, of course, the loss of local jobs."

The shift runs counter to the region's ascendance as a fashion trendsetter, Kyser said.

"Everybody is looking at Southern California as sort of a style leader in apparel and home furnishings," he said. "And yet you have no local department store chain."

Northern California, however, will get a boost. Federated's Macy's West division in San Francisco will expand to operate about 187 stores in seven states, compared with the 146 it currently runs.

Federated said that after the realignments in February, it will gradually phase out other operations, such as the one in North Hollywood. That process could take one to four months or longer, spokesman Jim Sluzewski said.

The shifts announced Tuesday will allow Federated to enhance future sales, increase profit and "concentrate on our best national brands," CEO Lundgren said in the statement.

"By announcing these decisions now," he said, "we can begin more specific planning for the future," including getting new merchandise into stores acquired from May as quickly as possible.

The changes are part of a broader plan to cut $175 million from next year's costs and $450 million annually thereafter. One-time expenses associated with the corporate and divisional consolidation and the nameplate changes will total $1 billion, spread over three years, Federated said.

The company said earlier that it would close 26 stores in California as it erased the Robinsons-May brand. Federated plans to shift workers in those stores to other jobs within the company, spokesman Sluzewski said.

Federated shares fell 94 cents Tuesday to $64.76.

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