Sep 20, 2005 3:06 pm US/Central
Federated To Cut Up To 6,200 Jobs In 2006
CINCINNATI (AP) ―
Federated Department Stores Inc. said on Tuesday it is planning to cut up to 6,200 jobs beginning in 2006 and will drop the landmark Marshall Field's name next fall from 62 stores it acquired this year as part of its takeover of May Department Stores Co.
Federated said it plans to sell the Philadelphia-based bridal group division it acquired from May and is studying what to do with its Lord & Taylor division. The Marshall Field's stores will be switched to the Macy's nameplate.
The job cuts will include 1,700 in St. Louis at May's corporate offices and about 4,500 as Federated phases out May's divisional operations in Boston, Houston, Arlington, Va., and Los Angeles. The cuts will start in March.
Federated had pledged not to cut any jobs before March 1 as part of its acquisition of its rival.
The job cuts are the first announced since Federated completed its $11.9 billion purchase of May in August, creating a combined retailing powerhouse better able to compete against Wal-Mart Stores Inc. and upscale merchants. The merger combined more than 1,000 stores with $30 billion in annual sales.
The retailer said previously that it was eliminating 10 May nameplates and that it was studying whether to keep the name of Marshall Field's, a Chicago landmark. "We have great respect for the legacy and traditions of Marshall Field's, and we carefully researched customer preferences and studied alternatives before making this decision to incorporate Marshall Field's into the nationwide Macy's brand," Federated Chief Executive Terry Lundgren said in a statement.
Marshall Field's has stores in eight states in the Midwest.
The cuts and name changes are intended to build the nationwide Macy's and Bloomingdale's brands while reducing costs by $175 million in 2006 and $450 million in 2007 and beyond, Federated said.
The cuts in St. Louis will come as Federated phases out May's division headquarters and the May Merchandising Corp. Most of those positions will be eliminated by the end of 2006, although some limited functions may remain for as many as 36 months. Some corporate positions in regional offices are expected to remain in St. Louis, the company said.
The bridal group includes 245 David's Bridal, 454 After Hours Formalwear and 11 Priscilla of Boston stores in 47 states and Puerto Rico. Lundgren said the operation was profitable but does not fit with Federated's strategy of focusing on department stores.
Federated spokesman Jim Sluzewski said the company started a program on Tuesday to talk with the affected employees and try to find other positions for as many as possible within Federated.
Federated, with corporate offices in Cincinnati and New York, now has 244,000 employees and stores in 49 states, the District of Columbia, Guam and Puerto Rico.
Federated shares rose 97 cents, or 1.5 percent, to $66.67 in afternoon trading Tuesday on the New York Stock Exchange. The company's stock has traded between $44.39 and $78.05 in the past year.
(© 2005 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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