Federated plans to close 11 stores, eliminate nearly 2,000 jobs

By

Posted 10:41PM on Thursday, January 16, 2003

CINCINNATI, OHIO - Federated Department Stores Inc. plans to close 11 stores and cut nearly 2,000 jobs this year as it expects its fiscal 2003 sales and earnings will be flat. The Cincinnati-based retailer said Thursday it will consolidate its Rich's and Macy's department stores in the Atlanta area, resulting in the closing of seven Macy's stores in April and the elimination of 1,500 jobs. It also plans to close Lazarus stores in Bloomington, Ind., and Indianapolis; a Goldsmith's store in Memphis, and a Macy's store in South Brunswick, N.J. Federated spokeswoman Carol Sanger estimated that those stores each employ about 100 workers. The closings are expected to reduce the company's net sales by about $100 million. The announcement came as Federated said it expects 2003 earnings per share to be between $3 and $3.20, below the consensus forecast of $3.71 by analysts surveyed by Thomson First Call. The company also said a preliminary review forecasts sales at stores open at least a year will be unchanged to down by 1.5 percent in fiscal 2003 when compared to the previous year. Federated releases its 2002 year-end earnings on Feb. 25. Federated's stock dropped $1.55, or 5.2 percent, to close Thursday at $28.35 on the New York Stock Exchange. Federated said it will consolidate its Rich's and Macy's stores in Atlanta beginning in February and bring Bloomingdale's to the Atlanta market in two major malls as early as this fall. Sanger said the two Bloomingdale's stores will employ about 500 workers and that the Macy's workers whose jobs have been eliminated would be given hiring preference. The consolidation of operations under a combined Rich's-Macy's nameplate will enable the company to concentrate its management resources and capital spending on one brand and key store locations in the Atlanta market, said James Zimmerman, Federated's chairman and chief executive officer. A total of 28 stores will begin branding themselves as Rich's-Macy's, beginning next month. They include Macy's stores in Georgia, Alabama and South Carolina. Federated estimated it will cost the company $115 million for the consolidations and closings. The company expects a 2002 fourth-quarter charge of $70 million, or 22 cents a share, for the closings. The company is one of the nation's leading department store retailers, with more than 460 stores in 34 states. Like many other retailers, sales have been hurt by the struggling economy. During the holiday shopping season, Federated reported same-store sales slipped 2.6 percent; overall sales were down 0.8 percent.