Federated changes boost Web site

By Bloomberg News

Federated Department Stores Inc.'s conversion of stores to the Macy's brand name is giving a boost to Macys.com, CEO Terry Lundgren said.

"I used to think of it as a decent sized store," Lundgren said of the Web site. "Now, I think of it as a very, very big store with the single best potential." He was speaking on a panel on online retailing at the National Retail Federation annual convention Tuesday.

Federated, the second-largest U.S. department-store operator, is selling chains it acquired as part of its $11 billion purchase of May Department Stores Co. and converting more than 400 May stores to the Macy's nameplate by September. Online sales in 2005 probably climbed 22 percent to $172 billion, said Carrie Johnson, research director of Forrester Research Inc., who was moderating the panel.

When Federated converted its own Rich's and Burdine's nameplates to Macy's last year, "Macys.com went up substantially," Lundgren said. The Web site has several hundred million dollars of annual sales, he said, without being more specific.

Macys.com's growth rate is well above the average for Federated's stores, with bridal and home merchandise important parts of that business, he said. Apparel and accessories also are growing.

"There is zero limit for what resources we are using to reinforce the Macys.com business," Lundgren said. "Eventually, it could be a very important business for us. We are more focused on it because we have a brand we are growing nationally."

It will be a while before the online business is as profitable as the department stores, he said.

Under Federated's restructuring, 11 of May's nameplates, including Marshall Field's and Filene's, will disappear, and Federated has said it will shed 80 stores. It also has said it will cut 6,200 jobs.

The retailer had sales of $21.5 billion in the first 11 months of its fiscal year, which ends this month.

Cincinnati-based Federated's shares jumped $1.78, or 2.4 percent, to $74.73 in New York Stock Exchange composite trading Jan. 13. They have climbed 30 percent in the past year. U.S. markets were closed Monday for the Martin Luther King Jr. holiday.

Forrester is based in Cambridge, Mass.