Fields Images

Field's & Leiter's "Marble Palace" in 1868.

Macy's star dims in suburb

Chain's traditional symbol must be toned down on store it takes over in Lake Forest

By Sandra Jones and Lisa Black
Tribune staff reporters
Published August 30, 2006

Lake Forest, the old money community that spurned a Costco store because it was afraid it might hurt its character, is mandating that Macy's dim its trademark bright red star when it takes over the historic Marshall Field's store in this North Shore suburb next month.

At the urging of its preservationists, the city-appointed Lake Forest Historic Preservation Commission approved last week a toned-down version of Macy's traditional logo on the outside of the 90-year-old Field's building anchoring the Market Square shopping court in the East Lake Forest historic district.

No tomato red star here. And no electric-powered letters that glow in the night. Oh, and the Field's signature green awnings must stay.

While Macy's owner Federated Department Stores Inc. has found few problems in other markets when it began mothballing longtime regional department store names to brand Macy's nationwide, the Chicago area isn't taking to change quite as quietly.

Field's fans have denounced the name change on Web sites while Federated has to keep the Field's nameplates and the famous clocks on the historic flagship State Street store, among other restrictions.

At the Lake Forest store the retailer is allowed to install a discreet bronze Macy's sign with raised polished letters on a dark background above the transom window at the store's entrance. The sign is less than a foot tall and about five feet long, not much bigger than the two existing, and prominent, "Marshall Field & Company" bronze plaques that must remain on the columns flanking the entryway.

The decision ends months of discussions over how to handle signage at the historic store as Federated converts the roughly 400 regional department stores around the nation, including Marshall Field's, on Sept. 9.

"It's a lot more subdued and in keeping with Market Square," said Virginia Munson, a member of the Lake Forest Historic Preservation Commission.

The broad-shouldered building with two-story Tuscan columns was designed by noted Chicago architect Howard Van Doren Shaw in 1916, housing the First National Bank, two utility companies and the YWCA.

Shaw was among the famous arts-and-craft style architects of the turn of the century, the widely influential English movement that attempted to re-establish the skills of craftsmanship threatened by mass production and industrialization. He designed many North Shore mansions, and Market Square is considered his masterpiece.

Field's took over the building at 682 Bank Lane in 1931, establishing the retailer's first branch store outside of its flagship on State Street in Chicago. Similar stores in suburban Evanston and Oak Park were built shortly after the Lake Forest store opened, but closed years ago. The Lake Forest store, with 61,000 square feet, remains the smallest outpost in Field's 61-store chain."We are working closely with the Lake Forest Preservation [Commission] to obtain the permits necessary to rebrand the exterior of our store to Macy's in Lake Forest," said Jennifer McNamara, a spokeswoman for Macy's North in Minneapolis. "Our plan is to replace the Marshall Field's sign on the store's exterior with a brass Macy's sign that is unique to our Lake Forest store."

The new Macy's sign is three-quarters smaller than the scripted Marshall Field's moniker that has adorned the store for decades. Macy's is required to keep the store's awnings dark green instead of Macy's black. And it must limit the inscription of the Macy's name to only two of the four awnings.

As for the famous red star, Macy's is permitted to use the star (as long as it's not red) on the bronze plaque, but not the awnings. Macy's typically puts its star before its name and uses a small star in lieu of an apostrophe. It must rely on a traditional apostrophe on the awnings, the city ordered.

The compromise placated the preservationists, who originally opposed any star.

"The sign has been so reduced in size that I think it needs a star," said Guy Berg, another commissioner.

Federated, with headquarters in New York and Cincinnati, hired Columbia, S.C.-based Image Resource Group Inc. to produce the Lake Forest signs, and many of the signs going up on stores nationwide. Most of the stores slated for conversion already have the lower case black Macy's letters, complete with its red star logo, on the buildings' exteriors, hidden under banners that read Marshall Field's until the Sept. 9 unveiling.

"Historically the city has taken the philosophy with respect to signage that it should provide direction rather than advertising purposes," said Peter Coutant, senior planner for Lake Forest. "This was really an opportunity to look at that sign and determine what was appropriate for the historic integrity of that building."

The leafy suburb put up a fight last year when Costco Wholesale Corp., the upscale warehouse club from Washington, attempted to build a store on the West Side of town.

Sign or no sign, some residents remain unhappy about the Macy's takeover.

Sally Spoehr, 75, a former Lake Bluff resident who moved to St. Augustine, Fla., said she stops at Marshall Field's in Lake Forest every year during her annual visit.

"When you came here the salesladies became your best friends," said Spoehr, who worked at the nearby library 20 years. "This store definitely has a lot of meaning."

"I would much rather I never saw Macy's," said Leslie Schwarzbach, 51, a Chicago native who has lived in Lake Forest nine years. She worked in a Marshall Field's stockroom at age 16, and carried her first credit card with Field's, she said.

"They sent me a Macy's card," Schwarzbach sniffed. "I don't think I'll be using it."

Macy's shows lack of street sense regarding landmark Field's store

By Sandra Jones
Tribune staff reporter
Published August 31, 2006

Signs of Macy's approaching takeover of Marshall Field's on State Street are everywhere. Trouble is, some of them are the wrong signs.

New backlighted directional signs posted throughout the store near escalator banks make it clear that the new owner of Field's doesn't spend much time in Chicago.

The New York department store chain mistakenly labeled Wabash Avenue as "Wabash Street," Randolph Street as "Randolph Avenue" and Washington Street as "Washington Avenue."

The gaffe is striking, given that all Macy's signmakers had to do was to look above the doors on the first floor of the Field's flagship to locate the correct names, inscribed decades ago to help navigate the blockwide store.

Transplanted New Yorker Mike Doyle spotted the snafu walking through the store Wednesday morning and posted it on his Chicago Carless blog that afternoon.

"While that's not a critical faux pas, it's certainly embarrassing and not the best way to try to prove to Chicago locals that the Gotham retailer is taking its move to State Street seriously," Doyle wrote on his blog.

The Field's chain, including the State Street store, officially becomes Macy's on Sept. 9.

Macy's North spokeswoman Jennifer McNamara was unaware of the error when first contacted by the Chicago Tribune. After looking into the matter, she said: "We are addressing the signage. They will be pulled down, and we will be replacing those. Our plan is to get those up as soon as possible."

If i knew of a way to make this image the headline for my blog, I would. I decided to visit the State Street store one last time before it becomes "Macy-ated" I started with the furniture on the 9th flooe and went all the way down to the basement and just snapped pictures of whatever caught my attention. Just me , my iPod and my trusty camera phone. Today's mood could be be described as "winsome."

The roof of the light well. I thought B & W would be an interesting way to represent it. At one point i understand this thing was covered over for the sake of looking "modern." While Dayton Hudson (now Target) did a lot of bad things during thier reign, they did a whole lot to improve the physical plant.

The light well, from the 9th floor. Since this was the way i framed the image (picture me sticking my camera phone out over the railing) I decided to post it as such.

The light well from the 2nd level

The Tiffany Dome. It's an amazing feature for someplace like a department store, in of all places, Chicago, but it has always been one of my favorite features

Backstage. I'm assuming we use these for hats etc. I dont know that this is a particuluarly intriguing picture, but i was struck by it

Backstage. I like both of these pics, they work both horizontal and vertical

Backstage

State Street changes catch up to Carson's

August 27, 2006

BY SANDRA GUY Business Reporter

The writing was on the wall for Carson Pirie Scott & Co.'s departure from its landmark State Street home, much as the last decade's news has been filled with predictions of department stores' demise.

Carson's will depart by March, and the building's landlord predicts a rush of new retailers, restaurants, entertainment and perhaps even a grocery store to fill one-third of the space that Carson's occupied.

The new retailers could even be set up and operating by holiday 2007, even though the Carson's building's owner, Joseph Freed and Associates, plans to tear down interior walls to better market the open space, said Paul Fitzpatrick, managing director at Freed.

That shrinking feeling

Keen observers will note two dovetailing events: Carson's was being edged out inch by inch by rumors that it would shrink in size in the 1 S. State building. At the same time, State Street has come alive with the wildly popular Millennium Park, as well as college students and shops designed to please them (Urban Outfitters, Forever 21, H&M). The dark and foreboding Wabash Avenue is due for a $20 million face-lift this spring, complete with multi-colored lighting of the L tracks.

Bit by bit, State Street cheerleaders have been hinting that Carson's is in the past.

On June 21, 2005, the Sun-Times reported that the Carson's building could keep a scaled-down Carson's store and open up space for specialty boutiques, or it could house a new retailer altogether, even a big-box retailer such as Target.

After all, Freed, the building's owner, has built a reputation as a developer of mixed-use projects such as the Arlington Town Square with Ann Taylor Lofts, Jos. A. Bank Clothiers, California Pizza Kitchen and a six-screen movie theater.

On Sept. 2, 2005, the Sun-Times reported plans were being made to reduce Carson's selling space at 1 S. State and to lease the newly opened space at much greater prices to other retailers.

Not your father's State St.

To get the best rent for the now wide-open Carson's space, Freed will market the Carson's building as two separate entities -- one on State Street and the other on Wabash Avenue. It will also close to pedestrians the crossway that linked one section of Carson's store to the other.

The only department stores remaining on State Street are in the midst of their own reinventions.

Sears, now owned by a billionaire hedge-fund guru, is installing a first-floor shop in its store at 2 N. State, showcasing its preppy Lands' End apparel, including a new Lands' End collection of lacy lingerie.

And the venerable Marshall Field's will disappear Sept. 9, replaced by Macy's, complete with shopping carts, iPod vending machines, upgraded fitting rooms and "runways" of mannequins displaying a variety of ways to wear the outfits that are on the racks.

The shoppers will decide

It's another reflection that shoppers, despite their fondest memories, are putting their money into Wal-Mart, Target, Kohl's, Best Buy and, on the other extreme, Neiman Marcus, Nordstrom and Gucci.

In the best of all worlds, middle-income Americans will demand with their pocketbooks middle American department stores, even in their reincarnations.

152-year-old has weathered bankruptcy, acquisitions

Carson Pirie Scott & Co. is a chain of about 30 traditional department stores that have been in business for over 150 years, appealing to moderate-to-upscale shoppers.

The chain started in 1854 when Irish immigrant Samuel Carson opened a dry goods store in Amboy, Ill., and later attracted partners Pirie and Scott. In 1989, Carson Pirie Scott & Co. was acquired by P.A. Bergner & Co., which filed for Chapter 11 bankruptcy in 1991.

Reorganized and emerging from bankruptcy in 1993, Bergner changed its name to Carson Pirie Scott & Co. In 1998, Carson's was acquired by Proffitt's Inc., which changed its name to Saks Inc. to reflect the acquisition of Saks Fifth Avenue, and moved Carson's headquarters to Milwaukee.

Late last year, Saks put everything except the Saks stores on the block, and BonTon stores bought Carson's for $1.1 billion.

Carson's State Street store closing

It is the end of an era—again.

By Sandra Jones
Tribune staff reporter

August 25, 2006, 11:14 PM CDT

Carson Pirie Scott will close its historic flagship store on State Street in the Loop, where it has been selling goods for more than a century, a victim of industry consolidation and changing shopping habits.

Bon-Ton Stores Inc., the department store operator that took over Carsons in March, said the giant store, which encompasses an entire downtown block and consists of nine conjoined buildings, was too expensive to operate. It doesn't make money and sales have been falling for the past two years, said Bud Bergren, president and CEO of the York, Pa.-based company.

The State Street store will stay open through the 2006 holiday season but will close by March 2007. Bon-Ton plans to look for another site in Chicago where it can build a more cost-efficient store, he said.

The 12-story Carsons building at 1 S. State St., a Louis Sullivan landmark, becomes the third recently mothballed Loop institution. The Berghoff closed its famous beer hall in February, and the hometown Marshall Field's takes on New York's Macy's moniker next month.

"I'm going to miss it," said Mary Pat Bitner, who works in the city and said she long appreciated Carsons' service and selection. "I've been shopping there for 20 years. I buy clothes for work and shirts for my husband. It's going to be awful. It's very sad."

Hard as it might be for many Chicagoans to accept these kinds of disappearances, the end of Carsons is more a reflection of rebirth than decline.

State Street is at the beginning of a renaissance, with many people moving into new condominiums and tourists flocking to the revived theater district and nearby Millennium Park, one of the nation's top urban attractions.

Experts say the Carsons building is better suited for a new generation of establishments than an old-line department store.

And Carsons' owners said it was not an option to stay.

"When we bought the company in March, it wasn't in our plans to do this, but it is the only Carsons store that is losing money," Bergren said. "Sales have been dropping quite a bit. It's not in the best shape."

The store would require a major overhaul to bring it up to standard. The floors are old and cracked, and the lights are dim. And maintaining the maze of elevators and escalators was cost prohibitive.

Shopper Jackie Sabado said she liked the bargains and merchandise at Carsons but not the store's decor.

"The lighting is horrid in there," Sabado said. "You can't tell the difference between black, navy blue and dark brown."

Bergren declined to disclose sales, but retail analysts estimate the store generates less than $50 million a year, down from nearly $80 million just a decade ago. The store suffered neglect after going through a 1991 Chapter 11 bankruptcy reorganization and several different owners.

"Over the years the amount of focus that store has gotten was in continual decline," said Anne Brouwer, senior partner at Chicago-based retail consulting firm McMillan Doolittle and a former Carsons executive. "A store like that requires a lot of attention."

Brouwer was vice president of merchandising at Carsons when it was owned by Milwaukee-based P.A. Bergner & Co. in the 1990s and recalls buyers were required to make regular trips to the store to make sure it was up-to-date. At that time the store boasted one of the largest-volume Coach businesses in the nation.

But shopping patterns have changed in the past decade. Short on time and eager for convenience, consumers have drifted away from department stores in favor of big-box and specialty stores.

That shift is one reason Carsons landlord Joseph Freed & Associates agreed to buy Carsons out of its lease, which didn't expire until 2022. Freed is planning to redevelop the 600,000 square feet and seven floors that Carsons operates, turning two floors or 250,000 square feet into retail and the remaining 350,000 square feet into office space.

Freed, which bought the 1 million-square-foot, block-long building for $19 million in 2001, already turned 400,000 square feet of the structure's upper floors into offices. The Illinois Department of Employment Security is one of the largest tenants. And the School of the Art Institute opened classrooms and offices there earlier this month.

Developers are keen on capitalizing on the Loop's transformation into a playground, bringing in more modern stores that appeal to a new generation of shoppers that have spurned department stores.

This is "an extraordinary opportunity for the development of a significant mass of retail," said Bruce Kaplan, president of Northern Realty Group Ltd.

"Everybody is excited to get into State Street," said Paul Fitzpatrick, managing director at Freed in charge of the Carsons project.

Fitzpatrick said he hopes to attract large tenants that can take an entire floor.

A grocery store is one possibility, he said, pointing to the increase in residents in the neighborhood. He declined to be more specific.

It is unlikely that another department store would take the space. J.C. Penney Co., Von Maur and Kohl's Corp. are the few department stores that are expanding.

Penneys is making a push into Chicago but is expected to stay in the suburbs. Kohl's recently opened a large store on the Near North Side. And while Von Maur would like to open a store downtown, the family-run department store favors the cachet of North Michigan Avenue.

"We would certainly entertain taking a space in Chicago," said Jim von Maur, president of the Davenport, Iowa-based company. "But the place to be is on Michigan Avenue."

A store such as Zara, a European cheap-chic retailer that is expanding in the U.S., is a more likely candidate, according to retail brokers.

Carsons first opened there in 1903 and stands at the place once dubbed the busiest intersection in the world.

Though State Street has seen a huge redevelopment surge of late, the famous corridor has lost a number of big department stores over the years as customers were lured to sprawling suburban malls. At one time, Chicago shoppers had six huge, full-service department stores to choose from on the street. Now there are only two: Marshall Field's, soon to become Macy's, and Sears, Roebuck and Co., which came back to State Street a few years ago. Sears has struggled to make money at that store and generated far less in sales than it had expected.

"This is in line with the changing character of State Street," said John Russick, curator at the Chicago History Museum. "Chicagoans have struggled with the question of a city that tears itself down and rebuilds itself whenever it needs to. We lament these things, but as time moves on, Chicagoans are amazingly adept at adapting to changing times."

Bon-Ton's Bergren said he is shopping for a new downtown location for Carsons. He has considered Chicago Place, the struggling Mag Mile mall, but at the same time noted the space as "difficult to work with."

Real estate brokers point to the Lord & Taylor store at Water Tower Place, which is expected to close, and the yet-to-be-built Block 37 project from Mills Corp. across from Marshall Field's on State Street as other possibilities.

Bon-Ton spokeswoman Mary Kerr said that Chicago's recently passed big-box ordinance, requiring stores over 90,000 square feet to pay a living wage, "did not play a role in our decision" to close the flagship. But the new law "will certainly be a factor as we look at a return on investment a [new] location would produce."

In a letter to Mayor Daley dated Aug. 24, Bergren said, "To be frank, our plans for a new Chicago store will be affected by the big box ordinance."

Carsons plans to keep open its other 25 department stores and five furniture stores throughout the Chicago area.

Carsons has gone through numerous ownership changes. Most recently, Saks Inc. sold it as part of a group of about 300 regional department stores to Bon-Ton for $1.05 billion.

"The Carsons store has been a fixture at State and Madison for over 100 years and we'll be sorry to see it close," Mayor Richard Daley said. "But shopping habits have changed over the years and downtown Chicago will adapt to this as it has to so many other changes in the business environment."

Tribune reporters Susan Diesenhouse and Ofelia Casillas contributed to this report

smjones@tribune.com

Copyright © 2006, Chicago Tribune

Carson's store leaving State Street

August 25, 2006

BY SANDRA GUY Business Reporter

Carson Pirie Scott & Co. will vacate its flagship store at 1 S. State St. in early 2007, the company said Friday.

The store is a masterpiece of architect Louis H. Sullivan's that Carson's has occupied for 102 years. Ironically, Carson's replaced a defunct retailer, Schlesinger and Mayer, when it occupied the space, according to a history of the building.

The company cited "negative sales trends, net operating losses from rising operating costs and the incentive of payments from the owner of the building, who has plans for future redevelopment of the landmark site."

Twenty-five Carson's department stores and five furniture stores will remain open throughout the metro area, including two in the Chicago city limits.

Jeff Renkert, vice president of marketing for the owner of the Carson's building, Joseph Freed and Associates LLC, didn't return calls seeking explanation of what redevelopment plans are in the works.

Middle-market department stores such as Carson's are considered dinosaurs because shoppers are flocking to discounters like Wal-Mart and Target and to specialty and luxury stores.

The Sun-Times reported a year ago that Carson's would reduce its selling space at the store and that the building's owner would lease out newly opened space at much greater prices. Carson's selling space totals 600,000 square feet.

Rumors are flying that the building will be turned into retail space tailored for college students.

Chicago's Loop has become the biggest "campus town" in Illinois, hosting some 52,000 students who would like new and cheaper places to eat, shop and park, according to a study released in January 2005 by Regional Economic Applications Laboratory at the University of Illinois.

The School of the Art Institute recently started leasing the 12th floor of the Carson's building - 54,000 square feet - for administrative offices and studios for its new master's degree programs in Architecture, Interior Architecture and Designed Objects.

The latest reports about the Carson's building followed Bon-Ton's announcement Thursday of a second-quarter loss of $19.8 million, or $1.20 a share - bigger than its year-ago loss of $1.4 million, or 9 cents a share.

Copyright © The Sun-Times Company

Macy's presentation doesn't pass test in university class

INSIDE RETAILING

By Sandra Jones

August 22, 2006

Federated Department Stores Inc.'s pending makeover of Marshall Field's rates one thumb up, two thumbs down from business students at Loyola University Chicago.

As part of a summer school final exam, students in the university's undergraduate strategic management course were asked to predict the success or failure five years down the road of Federated's plan to create a national department store out of a motley assortment of regional chains.

About one-third of the class forecast success and two-thirds anticipated varying degrees of failure, said Homer Johnson, professor of management at Loyola's school of business administration and the course's creator. Johnson posed the question to students in the spring semester as well, and got the same results.

"It's a good exercise," said Johnson. "Students can argue easily for both ways. This is no slam dunk."

Among the reasons cited for success were Macy's new store design, the expansion of its exclusive in-house brands, the purchasing power that comes from economies of scale and the retailer's marketing efforts to attract young consumers who, for the most part, have avoided shopping at department stores.

Students skeptical that the strategy will work focused on Federated's debt ($8.6 billion as of July 29), competition from big-box stores and specialty stores, the long-running consumer shift away from department stores in general and doubts about the company's ability to execute.

Perhaps more telling than the exam itself was the response Johnson received when he asked his students, most who are roughly 21 or 22 years old, to raise their hand if they shop at department stores. Of the 122 students in both classes, only one said he recently made a department-store purchase: He went to Sears to buy a DieHard battery for his car, Johnson said.

"Young people just don't go to department stores," said Johnson. "It's a key point in the history of Federated and the department-store industry. And the real question is, is this the beginning of the end or can they revive?"

Federated, with headquarters in New York and Cincinnati, acquired Marshall Field's last year as part of its $11 billion purchase of St. Louis-based May Department Stores Co. On Sept. 9, the retailer plans to convert hundreds of stores to the Macy's banner, including Field's.

IN THE RED: The construction pace is picking up at Marshall Field's State Street in preparation for next month's conversion to Macy's. The spray of paint as workmen change the color of columns and walls to Macy's red is as common as the spray of cologne from eager cosmetic sales associates. Price-check scanners, black computer boxes that allow shoppers to look up merchandise prices without having to find a sales assistant, also are being installed.

OTHER FIELD'S CHANGES: The Yves Saint Laurent accessories boutique, which opened on the first floor in 2002, is shuttered. Field's moved a small selection of YSL handbags and accessories to the store's YSL designer clothing boutique at the 28 Shop. A 1,300-square-foot Coach shop, one of the largest displays of Coach handbags in Macy's chain, is under construction in its place, said Macy's North spokeswoman Jennifer McNamara.

----------

smjones@tribune.com

Copyright © 2006, Chicago Tribune

Go home, Yankee imperialists!

By Sara Paretsky, the author of the V.I. Warshawski crime novels. "Fire Sale" is her latest book

August 17, 2006

I ordered a new bed recently at Marshall Field's. When it arrived, the delivery slip was marked "Macy's" and the box springs were labeled, "Exclusive to Macy's."

Macy's? Macy's? That's a New York store. If I wanted to shop in New York, I'd go to New York. I happen to prefer Chicago.

I've tried New York. When I was 23, I went there hoping to get a job with a publisher or magazine, but couldn't get my foot in any of those doors; I returned to Chicago, where I became a writer. When I wrote my first novel, 37 New York publishers turned it down, saying that a book set in Chicago had regional interest only, and not enough people read in the Midwest to merit publishing a book set here. Do we illiterate Midwesterners need to give money to a New York firm?

My bank, the once-venerable First National Bank of Chicago, with its fabled art collection, now sports an ungainly Chase logo on its elegant top, and they tell me that after Sept. 1, the Field's signs will come down; the famous clocks will carry the New York label--set, perhaps, to Eastern time. All Marshall Field's charge cards are being changed to Macy's. Then I got to thinking about colonial protests of the past, starting with the famous tea party. Chicagoans, tear up your Macy's cards and dump them in the harbors, I started to cry, but my sons reminded me there's too much plastic in Lake Michigan already.

What will become of us next? The White Sox as a Yankee farm team? The famous Chicago dogs relabeled "Nathan's"?

Gandhi got the British out of India by means of simple boycotts. Rise up, Chicago, flex those broad shoulders and shake off the imperialist tyrant's yoke!

Copyright © 2006, Chicago Tribune

Insult or Injury?

So I'm standing at my register today when a customer approachs me.

"Hi, I have a favor to ask...there's nobody over in underware so i hope you can help me?"

"I'm sorry about that" I say, "what can I do for you?"

" I need some underware and I dont know what size I wear..."

I'm thinking at this point he needs a tape measure, so I reach into the drawer as he continues. Insted he turns around, pulls up his shirt, reaches into the back of his pants and pulls the back of his undeware up.

I'm stunned

I'm now staring down the back of this man's ass..and i mean, the whole thing

However, being the professional that I am, I gently reach down and look at the lable of his 2xist underware and inform him that he's a Large.

He thanks me, I ask him if there's anyhting else he needs and he trots off in the direction of the undweware aisle. Fine, the less of his naked behind I see the better. Since he stated that there's nobody over there, I assume that he will return to me with his purchase since I have gone the extra mile.

5 minutes later, I look across the department and low and behold, he has gone to a different register to check out with his purchase.

Yes indeed, not only did i have to reach into his pants, as distasteful as that was, but someone else got the sale.

I just keep telling myself, it's only retail.

Todays Sales

$2480

This is it for other Federated stores

By Anne D'Innocenzio
Associated Press

August 10, 2006

NEW YORK -- Federated is betting it can change how shoppers feel about department stores as it absorbs former May Co. shops and turns its Macy's chain into a national brand with more than 800 stores.

Federated Department Stores Inc., now commanding about 25 percent of the U.S. department store business, based on figures from the U.S. Census Bureau, is using its increased clout to develop more exclusive merchandise and attract younger shoppers with new features such as vending machines that sell iPods.

Macy's first national TV and print advertising campaign will break Sept. 9, when more than 400 stores acquired when it bought May Department Stores Co. a year ago--including such homegrown names as Hecht's, Foley's, Filene's and Marshall Field's--are officially converted to Macy's.

So far, the Federated-May combination is on track. Federated, which also operates 40 Bloomingdale's stores, reported on Wednesday better-than expected second-quarter results and raised its second-half profit forecast. Shares rose 2 percent, or 67 cents, to close at $34.46 on the New York Stock Exchange.

Still, the $22 billion behemoth retailer faces a tough battle on price from discounters including Target Corp. and on customer service from specialty stores such as Chico's FAS Inc. as it seeks to hold on to former May customers and attract new ones.

"The big challenge is to hold on to the local loyalty factor while changing the name and changing the format to achieve success nationwide," said Janet Hoffman, managing partner of the North American retail division of Accenture, a consulting firm.

"It's the lack of pizazz that has hurt department stores," Hoffman noted. Yet, she added, the comfort of having a local store has enabled "department stores to hang on to a thread."

Terry Lundgren, CEO, president and chairman of Federated, says he's unfazed by the challenge.

"Macy's will be the largest seller of all the important brands," said Lundgren, in a recent interview. "These are affordable luxury. This is not Gucci or Prada. And we are going to be catering to a large cross-section of the American population."

Lundgren emphasized that Federated is not adopting a cookie-cutter merchandising approach. Federated's seven regional headquarters will do the buying and planning regionally, but there will be some differences from store to store, Lundgren said.

For example, there will be upgraded merchandise at the Foley's in the NorthPark Center in Dallas, and Filene's site in Chestnut Hill, Mass.--places with demographics that can support higher-end products. Meanwhile, the Hecht's site in Marlow Heights, Md., and a Filene's location in Meriden, Conn., will continue to have a moderate-price focus, though more fashionable merchandise.

Jackie Bogue, a customer at the Famous-Barr store in the Galleria in St. Louis, said she drives more than 70 miles from her home in Bowling Green, Mo., to shop at the store, which will have a more upscale focus as a Macy's.

"I was buying the higher-end things at Famous-Barr, so it wouldn't bother me," she said.

Federated's sales had been sluggish at about $15.5 billion for the four years before the May acquisition, which boosted its total revenue to $22.39 billion for the last fiscal year. Meanwhile, May had lagged behind competitors like Federated because it failed to come up with compelling merchandise and instead resorted to aggressive price cutting.

Through July, Federated has averaged 2.4 percent in same-store sales growth since the fiscal year began in February. Same-store sales are considered a key barometer of a retailer's health.

But Federated said Wednesday it expects same-store sales, or sales at stores open at least a year, to rise between 3 percent and 5 percent in the last two quarters of 2006, up from an earlier forecast of 2 percent to 4 percent.

In a conference call with analysts, Karen Hoguet, Federated's chief financial officer, said the company had hoped for slightly higher sales at the former May stores, whose business has lagged because of all the disruptions, but their performance was within expectations.

For the quarter ended July 29, Federated reported net income of $317 million, or 57 cents per share, versus a prior-year profit of $148 million, or 42 cents per share. Revenue nearly doubled, to roughly $6 billion from $3.62 billion in the year-earlier period.

Excluding costs of the May integration and other adjustments, earnings were 49 cents per share, beating a 44-cent estimate among analysts polled by Thomson Financial.

Federated forecast third-quarter earnings of 15 to 20 cents a share and $1.40 to $1.50 per share for the fourth quarter, up from a previous view of $1.50 to $1.62 per share for the combined periods

Federated is capitalizing on its increased clout with vendors to strike exclusive partnerships with fashion brands, a key strategy to set itself apart from rivals. Macy's will also be expanding its store label business, key names such as INC and Charter Club, which have grown three times faster than branded products over the past four years.

Among the new Macy's exclusives is a new line from designer Elie Tahari called T Tahari, coming this fall. Starting in February, Macy's will have exclusive rights to sell O Oscar, an affordable collection from Oscar de la Renta.

A big thrust in Macy's home area will be an exclusive Martha Stewart collection, to make its debut in fall 2007. Lundgren conceived the idea of having up to 3,000-square-foot house environments, developed by KB Homes, at Macy's Herald Square flagship in New York, Macy's Union Square store in San Francisco, and the Marshall Field's State Street location in Chicago.

Lundgren acknowledged fierce competition from the likes of Target and J.C. Penney, which are offering trendier fashions at lower prices, but he believes Federated's store experience will give it an edge.

To attract younger shoppers, Macy's is counting on self-serve vending machines, which will offer iPods and eventually other popular consumer electronics. The displays are being rolled out at 180 Macy's stores this fall. Macy's year-old shopping Web site aimed at teens, called thisit.com, will also have more power because it can be marketed across Macy's stores on a national basis.

In recent years, Federated has been enlarging fitting rooms and adding television and seating areas. From 2006 to 2008, Federated said it plans to spend as much as $4 billion on in-store improvements at the former May Co. locations.

Lundgren also has had to deal with some emotional fallout among some shoppers from the conversion of 11 former May nameplates, ending an era of having homegrown department stores in such major cities as Washington and Chicago. The worst came from Chicago, where Marshall Field's flagship has been a century-old fixture, though resistance has subsided, Lundgren said.

Copyright © 2006, Chicago Tribune

They come from all over the world, just for this. I understand that the signs will stay.

The Clock. Actualy there are two, this is the one at Washington and State. The most iconic clock short of Big Ben I would wager. Marshall Fields, State Street, Aug 2006

The painful reality. Marshall Fields, State Street, Aug 2006

The store isnt exactly beautiful, but it is what it is. Marshall Fields, State Street, Aug 2006

Marshall Fields, State Street, Aug 2006

Marshall Fields, State Street, Aug 2006

Marshall Fields, State Street, Aug 2006

FIELD'S FINAL DAYS

Macy's makes it obvious

As Marshall Field's signs fall, Federated about to find out if shoppers' threats, anger real

By Sandra Jones
Tribune staff reporter

August 13, 2006

Macy's red star is rising in Chicago.

The department store chain's red-and-black logo is going up on Marshall Field's stores around town. Red Macy's credit cards are in the mail. Macy's merchandise is arriving on the floors. And the window displays on State Street are draped in Macy's red.

It's been almost a year since Federated Department Stores Inc. unveiled plans to drop Marshall Field's in favor of the Macy's moniker. On Sept. 9, a Saturday, the wait will be over, and the real test will begin: Will shoppers upset about losing the Marshall Field's name follow through on threats to boycott Macy's?

If conversions in other markets are any indication, wooing shoppers under the Macy's banner isn't going to be easy.

Scarborough Research found that in four out of five markets where Macy's already replaced the name of the hometown department store, shoppers surveyed say they are visiting Macy's less frequently than when the store operated under its original name.

Scarborough, a New York-based market research firm that measures consumer shopping patterns, tracked shoppers at Rich's in Atlanta, Goldsmiths in Memphis, Bon-Marche in Seattle, Lazarus in Columbus and Burdines in Miami as each store's name changed--first hyphenated to include the Macy's name in August 2003 and then converted to solely Macy's in March 2005.

When asked in annual surveys between 2002 and 2006 where they had shopped in the past three months, the number of consumers visiting Macy's fell in all of the markets surveyed except Miami, where Macy's was already a familiar name.

"There are certain brands that create a great deal of customer loyalty," said Jay McIntosh, director of consumer products for the Americas at New York-based Ernst & Young LLP's Chicago office. "Anyone who changes the names of one of those stores takes significant risks."

To be sure, consumers are renowned for saying one thing and doing another. And the appeal of department stores as shopping destinations has been waning for years, overshadowed by the ascent of specialty stores and big-box discount chains.

But the survey results signal that Federated could face an uphill road in Chicago where the Field's names is entrenched and shoppers have been vocal about their displeasure.

One critic is James McKay, creator of FieldsFansChicago.org, a blog that has received 600 posts in the past month from people upset with the name change. McKay is organizing a demonstration on Sept. 9, the day Macy's officially eclipses Field's.

More than 250 people have expressed support for the demonstration, he said, and his cohorts have already mailed about 6,000 "Keep It Marshall Field's" lapel stickers to Field's fans.

"The big protest has to do with the fact that we're losing part of Chicago," said McKay. "It is in support of Field's, but it's a much bigger thing. We're losing a piece of Chicago culture by it becoming Macy's. We're getting homogenized."

Ellen McGury Stone said she has already stopped shopping at Fields and destroyed her credit card. "I've lived in Chicago all of my life. My parents and my grandparents all shopped at Marshall Field's. It means Chicago to us. It's not just that they're changing the name. It's that they're changing it to the name of a store that means New York. It's a double whammy."

Chicago's feelings are certainly known to Federated's top brass. Karen Hoguet, the retailer's chief financial officer, addressed the issue last week in a conference call with analysts. "We're fairly optimistic that when the Chicago customer, which is the only one of the markets where we've had that backlash, we're hoping that when they see we're keeping the best of Field's but enhancing that greatly with all that Macy's offers, that the customer will be pleased."

Federated acquired Field's last year as part of its $11 billion purchase of May Department Stores Co. On Sept. 9, in one fell swoop, the Macy's name will appear on more than 400 regional department stores included in the deal, doubling the number of Macy's nameplates nationally and wiping out almost a dozen regional names, including Famous-Barr, Filene's, Hecht's and Kaufmann's.

Federated Chairman and CEO Terry Lundgren has repeatedly said Field's needs a makeover, pointing to years of declining sales. The New York-based firm is giving extra attention to Chicago, especially the high-profile Field's State Street flagship, creating a display candy kitchen for making Frango mints and building an express elevator to the famed 28 Shop, where well-heeled Chicagoans purchase designer clothing.

"One of the central issues is how to take advantage of a national scale and stay relevant to the local customer," Lundgren told a July luncheon gathering of North Michigan Avenue retailers. "We're trying to be locally responsible within a national umbrella."

Lundgren is betting he can reinvent the U.S. department store by creating one national brand, streamlining advertising and beefing up high-margin house brands such as INC and Alfani that shoppers can't find elsewhere.

Federated's latest results seem to support Lundgren's view. Same-store sales, a key measure of a retailer's health, rose 1.3 percent last year, and increased 2.2 percent in the first half of 2006, the company reported. Florida, former home of Burdines, and the Pacific Northwest, former home of Bon-Marche, were "two of the best performing divisions," noted spokesman Jim Sluzewski, who discounted Scarborough Research's findings.

With 61 stores ringing up annual sales estimated between $2 billion and $2.5 billion, Field's will account for less than 10 percent of Federated's $23 billion department store empire. Federated also owns 36 Bloomingdale's stores.

Standard & Poor's analyst Jason Asaeda said he considers changing the name a lesser risk than the threat of Macy's losing ground nationwide to J.C. Penney Co., Kohl's Corp. and Nordstrom Inc.

If the company stumbles in executing the transformation, the analyst said, that could lead to discounts and, in turn, hurt profit margins.

Penneys CEO Myron Ullman told investors last week that Penneys has already started to pick up sales from customers disenchanted with Macy's conversions.

Federated has at least won over Anthony Qaiyum, owner of Chicago-based Merz Apothecary. He operates a leased shop inside Field's State Street store and at first wasn't keen on losing Field's name.

Qaiyum believes the store was treated like an "unwanted stepchild" under previous owners Target Corp. and May Co.

"I do feel with Federated someone is finally paying attention and trying to make it a great department store. They're very serious about this in a way I haven't seen anyone before."

----------

smjones@tribune.com

- - -

Shoppers tend to drop off as names disappear

Scarborough Research tracked shoppers at Rich's in Atlanta, Goldsmiths in Memphis, Bon-Marche in Seattle, Lazarus in Columbus, Ohio, and Burdines in Miami as each store's name changed--first hyphenated to include the Macy's name in August 2003 and then converted to solely Macy's in March 2005.

SEATTLE

A marked decline in shoppers occurred there, where Bon-Marche has been around since 1890. Some 41 percent of consumers said they shopped at Macy's in 2006, down 10 percentage points from 51 percent in 2002 when it was simply Bon-Marche.

COLUMBUS, OHIO

In the same time frame, in the hometown of Lazarus, the percentage of shoppers frequenting Macy's fell 9 points to 30 percent.

MEMPHIS

In Goldsmith's base town, the percentage fell 8 points to 35 percent as Macy's put its nameplate on the local stores.

GREATER ATLANTA

Macy's has had a presence since the 1980s, and Rich's has been a fixture for more than a century. Some 36 percent of consumers said they shopped at Macy's in 2006 compared with 39 percent who shopped at Rich's-Macy's in 2004. In 2002, when both stores operated side by side, 46 percent of shoppers said they frequented either Rich's or Macy's. When asked if they specifically visited one or the other, 41 percent said they shopped at Rich's and 28 percent said they shopped at Macy's.

MIAMI

At Burdines, another market where Macy's has been around for two decades, the renaming appeared to have little effect. Of those shoppers surveyed, 47 percent said they shopped at Macy's in 2006, unchanged from the 47 percent in 2004 that shopped at Burdines-Macy's. In 2002, 57 percent surveyed shopped at either Burdines or Macy's. When asked to break it out, 51 percent of shoppers frequented Burdines and 24 percent visited Macy's.

--Sandra Jones

The sample size of the surveys ranged from 2,000 to 5,000. The estimated margin of error is no more than 3 percentage points.

Copyright © 2006, Chicago Tribune

Who We Were

For more than a century, Marshall Field's stores have served communities throughout the Midwest. Through the years, people have turned to us for fine merchandise and service as well as for rewarding career opportunities. They've also known they can count on us to give back, since we have always believed that strong communities serve everyone well.

• At Marshall Field's stores, the guest is always first. This guest-focused approach has inspired millions of shoppers across the Midwest and beyond to look to Marshall Field's for fashion leadership, superb guest service and a commitment to community involvement.
• There are 60 Marshall Field's stores, located in Illinois, Indiana, Minnesota, Michigan, North Dakota, Ohio, South Dakota and Wisconsin.
• Approximately 25,000 team members work in Marshall Field's stores, with corporate offices in Chicago, Minneapolis and Detroit.
• When you shop at Marshall Field's, you support worthy causes in your community: projects that inspire children to read and learn, arts and cultural organizations that stimulate the imagination and health and welfare programs that strengthen the lives of children and families.

History:

The start of a new millennium seems a most appropriate time to celebrate the uniting of three great department stores under one great name. In 2001, Dayton's and Hudson's joined under the Marshall Field's banner to create a bigger, better shopping experience for the guests we've been proud to serve throughout the 19th and 20th centuries - and now the 21st century.

Minneapolis-based Dayton's was among the nation's leading department stores for nearly a century. Founded in 1902 by George Draper Dayton, the stores quickly became synonymous with quality merchandise, superior service, fashion leadership and community involvement. Before changing its name to Marshall Field's, Dayton's stores numbered 19, serving communities throughout the upper Midwest. For more than a century, Hudson's was a dominant force in Michigan retailing, with a strong reputation for fashion leadership, guest service and community involvement. In 1969, the J. L. Hudson Company merged with The Dayton Corporation to form the Dayton Hudson Corporation, adding 21 Michigan stores to the total.

In June 1990, Marshall Field's was acquired by the Department Store Division of the Dayton Hudson Corporation, now Target Corporation.

In 2004, Target and The May Department Stores Company announced the sale of the historic and respected Marshall Field's department store group, including the 62 stores serving communities in Illinois, Indiana, Michigan, Minnesota, North Dakota, Ohio, South Dakota and Wisconsin.

In 2005, Federated Department Stores merged with The May Department Stores Company - combining two of the best department stores companies in America and creating a new retail company with truly national scope and presence.

From its beginnings in downtown Chicago in 1852, Marshall Field's has earned a reputation of excellence through its landmark achievements, making it one of the premier department stores in the United States. Always a leader and innovator, Marshall Field's was the first American department store to establish a European buying office, which was located in Manchester, England. It was the first to open a dining room restaurant and the first to offer a bridal registry. In addition, the store has established many lines of exclusive private-label merchandise, including our world-famous Frango® chocolates, as well as departments devoted to exquisite couture fashions, silver and jewelry.

Architecturally, the Marshall Field's Chicago State Street Store is without peer. The Tiffany Ceiling is the largest glass mosaic of its kind and the first ceiling ever built in favrile iridescent glass. The Great Clock at the corner of State and Washington streets has been keeping time for over a century and has been celebrated by American artist Norman Rockwell.

Each holiday season, Marshall Field's adds to Chicago's festivities with its lavish store window displays and internationally acclaimed Great Tree that delights young and old alike. The popular holiday traditions that have been a part of Dayton's history are continuing as Marshall Field's. The animated displays in the Minneapolis store's 12,000 sq. ft. auditorium have been a part of many families' holiday celebrations since 1963, with nearly 500,000 people viewing the auditorium show each year.

Please dont throw me in the stockroom...

Today's Sales

$1410.

Tough row to hoe at Field's

August 10, 2006

BY SANDRA GUY Business Reporter

Shoppers are getting glimpses of a Macy's overhaul at Marshall Field's on State Street, but the parent company knows it faces an uphill battle for acceptance with Marshall Field's loyalists.

In response to an analyst's question on a conference call announcing better-than-expected financial results Wednesday, Federated Department Stores Chief Financial Officer Karen Hoguet said, "We'll just have to see what happens. We're fairly optimistic that when the Chicago customer sees that we are keeping the best of Marshall Field's and enhancing it greatly with the best of Macy's, he and she will be pleased."

The reaction will come on Sept. 9, the day when the 138-year-old icon that is Marshall Field's will be replaced by Macy's.

THE STATE OF THE STATE STREET STORE

The transition of Field's into Macy's is under way at the Field's flagship store at 111 N. State.

A Frango Mints viewing kitchen, where shoppers can watch workers dip Frangos in chocolate, is under construction next to the Frango Cafe on the seventh floor of the flagship store.

Salespeople are being trained to explain how new women's private label clothing, such as Inc, Alfani and Charter Club, compare with old labels no longer in the store.

And a private entrance to the women's couture 28 Shop at 28 E. Washington is under construction.

Skepticism reigns on the Web site dedicated to Fields' supporters, www.FieldsFansChicago.org.

James McKay, a Chicagoan who runs the Fields' fans Weblog, is skeptical of Federated's announcement Wednesday that sales lagged at Marshall Field's and 10 other former May Department Store chains because of store remodeling disruptions, merchandise change-outs and clearance sales.

"I'd think everything should be flying off the rack with clearance sales," he said, "and the remodeling has been minimal."

The slow sales at the former May Department Stores, which Federated acquired on Aug. 30, 2005, were among the few blots on an otherwise stellar earnings report.

Federated raised its forecast for sales and profits in the crucial back-to-school and holiday seasons based on better-than-expected results at its Macy's and Bloomingdale's stores in the three months ended July 29.

Second-quarter net income more than doubled with help from a cash refund from the Internal Revenue Service.

The company reported net income of $317 million, or 57 cents a share, more than double year-ago profits. Excluding costs of the May stores takeover and the sale of credit card receivables to Citigroup, profits totaled 49 cents a share, higher than Federated's earlier forecast.

Revenue totaled $6 billion, up 66 percent, but missed analysts' consensus estimate of $6.15 billion. The revenue includes Macy's, Bloomingdale's and the former May Department Stores.

Sales at Macy's and Bloomingdale's stores open at least a year rose 4.6 percent in the quarter, the best showing in more than two years.

Federated's stock jumped on the news, but ended the day up 67 cents, or about 2 percent, ending at $34.46.

David Heupel, portfolio manager for Thrivent Investments, said Federated's results show that it has managed inventory and merchandise mixtures well.

Though Heupel believes that the Macy's transition will involve "lots of fits and starts," he sees Federated's takeover of May, including Marshall Field's, as a positive one in the long run.

"Down the road, this can be a very powerful and profitable company under one roof," Heupel said.

New Field's owner aims to bring 'pizazz' to stores

Federated is betting it can change how shoppers feel about department stores as it absorbs former May Co. shops and turns its Macy's chain into a national brand with more than 800 stores.

Federated Department Stores Inc., now commanding about 25 percent of the U.S. department store business, based on figures from the U.S. Census Bureau, is using its increased clout to develop more exclusive merchandise and attract younger shoppers with new features such as robotic vending machines that sell iPods.

Macy's first national TV and print advertising campaign will break Sept. 9, when more than 400 stores acquired when it bought May Department Stores Co. a year ago--including such homegrown names as Marshall Field's, Hecht's, Foley's, and Filene's--are officially converted to Macy's.

So far, the Federated-May combination is on track. Federated, which also operates 40 Bloomingdale's stores, reported on Wednesday better-than expected second-quarter results and raised its second-half profit forecast. Shares rose 2 percent, or 67 cents, to finish at $34.46 on the New York Stock Exchange.

Still, the $22 billion behemoth retailer faces a tough battle on price from discounters including Target Corp. and on customer service from specialty stores such as Chico's FAS Inc. as it seeks to hold on to former May customers and attract new ones.

"The big challenge is to hold on to the local loyalty factor while changing the name and changing the format to achieve success nationwide," said Janet Hoffman, managing partner of the North American retail division of Accenture, a consulting firm.

"It's the lack of pizazz that has hurt department stores," Hoffman noted. Yet, she added, the comfort of having a local store has enabled "department stores to hang on to a thread."

Terry Lundgren, CEO, president and chairman of Federated, says he's unfazed by the challenge.

"Macy's will be the largest seller of all the important brands," Lundgren said in a recent interview. "These are affordable luxury. This is not Gucci or Prada. And we are going to be catering to a large cross-section of the American population."

Lundgren emphasized that Federated is not adopting a cookie-cutter merchandising approach. Federated's seven regional headquarters will do the buying and planning regionally, but there will be some differences from store to store, Lundgren said.

For example, there will be upgraded merchandise at the Foley's in the Northpark Mall in Dallas and Filene's site in Chestnut Hill, Mass.--places with demographics that can support higher-end products. Meanwhile, the Hecht's site in Marlow Heights, Md., and a Filene's location in Meridan, Conn., will continue to have a moderate-price focus, though more fashionable merchandise.

Lundgren also has had to deal with some emotional fallout among some shoppers from the conversion of 11 former May nameplates, ending an era of having homegrown department stores in such major cities as Washington D.C. and Chicago. The worst came from Chicago, where Marshall Field's flagship has been a century-old fixture, though resistance has subsided, Lundgren said.

Paul Arola of Park Forest, Ill., a loyal Marshall Field's customer for 40 years, doesn't plan to stop, though he views the name change as unfortunate.

"I'll always think of it as Marshall Field's," Arola said.

"I know that keeping the name for the name's sake is not the right answer," Lundgren said. "The business was not performing for years."

Jackie Bogue, a customer at the Famous-Barr store in the Galleria in St. Louis, Mo., said she drives more than 70 miles from her home in Bowling Green, Mo., to shop at the store, which will have a more upscale focus as a Macy's.

"I was buying the higher-end things at Famous-Barr, so it wouldn't bother me," she said.

Federated's sales had been sluggish at about $15.5 billion for the four years before the May acquisition, which boosted its total revenue to $22.39 billion for the past fiscal year. Meanwhile, May had lagged behind competitors like Federated because it failed to come up with compelling merchandise and instead resorted to aggressive price cutting.

Through July, Federated has averaged 2.4 percent in same-store sales growth since the fiscal year began in February. Same-store sales are considered a key barometer of a retailer's health.

But Federated said Wednesday it expects same-store sales, or sales at stores opened at least a year, to rise between 3 percent and 5 percent in the last two quarters of 2006, up from an earlier forecast of 2 percent to 4 percent.

In a conference call with analysts, Karen Hoguet, Federated's chief financial officer, said the company had hoped for slightly higher sales at the former May stores, whose business has lagged because of all the disruptions, but their performance was within expectations.

For the quarter ended July 29, Federated reported net income of $317 million, or 57 cents per share, versus a prior-year profit of $148 million, or 42 cents per share. Revenue nearly doubled to roughly $6 billion from $3.62 billion in the year-earlier period. Excluding costs of the May integration and other adjustments, earnings were 49 cents per share, beating a 44 cent estimate among analysts polled by Thomson Financial.

Federated forecast third-quarter earnings of 15 to 20 cents a share and $1.40 to $1.50 per share for the fourth quarter, up from a previous view of $1.50 to $1.62 per share for the combined periods

Federated is capitalizing on its increased clout with vendors to strike exclusive partnerships with fashion brands, a key strategy to set itself apart from rivals. Macy's will also be expanding its store label business, key names such as INC and Charter Club, which have grown three times faster than branded products over the last four years.

Among the new Macy's exclusives is a new line from designer Elie Tahari called T Tahari, coming this fall. Starting in February, Macy's will have exclusive rights to sell O Oscar, an affordable collection from Oscar de la Renta.

A big thrust in Macy's home area will be an exclusive Martha Stewart collection, to make its debut for fall 2007. Lundgren conceived the idea of having up to 3,000-square-foot house environments, developed by KB Homes, at Macy's Herald Square flagship in New York, Macy's Union Square store in San Francisco, and the Marshall Field's State Street location in Chicago.

Lundgren acknowledged fierce competition from the likes of Target and J.C. Penney, which are offering trendier fashions at lower prices, but he believes Federated's store experience will give it an edge.

To attract younger shoppers, Macy's is counting on self-serve robotic vending machines which will offer iPods and eventually other popular consumer electronics. The displays are being rolled out at 180 Macy's stores this fall. Macy's year-old shopping Web site aimed at teens called thisit.com will also have more power because it can be marketed across Macy's stores on a national basis.

In recent years, Federated has been enlarging fitting rooms and adding television and seating areas. From the 2006 to 2008, Federated said it plans to spend as much as $4 billion in store improvements on the former May Co. locations.

End of the day