Retail Rants

Bad to Worse

2007-09-17T12:32:00.000-07:00

Stock spotlight
SPOTLIGHT | Sale rumors lift Macy's

September 15, 2007
Macy's Inc. shares rose 3.2 percent amid renewed speculation that the second-largest U.S. department-store chain will be acquired. Friday's talk was that Vornado Realty Trust and Edward Lampert's ESL Investments Inc. hedge fund would buy it for $43 a share. Macy's shares rose 93 cents to $30.18.

Stock spotlight

August 30, 2007
Macy's shares jumped 6.2 percent, or $1.84 to $31.69 Wednesday. On Tuesday, Cincinnati-based Macy's raised $350 million by offering 5.5-year notes that paid 73 basis points more than five-year debt issued in March. On Wednesday, it announced that Ticketmaster would open 38 more outlets in its stores.

Macy's cuts outlook after profit falls 77 percent for the quarter
RETAILING | Cost of integrating May stores blamed, shares dip 2 percent

August 16, 2007
BY SANDRA GUY sguy@suntimes.com
Macy's suffered a 77 percent drop in profits and a sales decline in the second quarter, and cut its full-year sales and earnings outlook.

Yet executives said strong sales on the Web and shoppers' response to renewed coupon promotions and a new Martha Stewart collection show promise in a weak economy.

Macy's shares dipped 63 cents, or about 2 percent, to $31.10.

Profits were hurt by higher-than-expected costs of integrating more than 400 former May Department Stores, including the Marshall Field's chain. Macy's bought the May Department Stores for $11 billion in August 2005.

But cost cuts helped shrink selling, general and administrative expenses.

Sales at the former Marshall Field's and other May stores continue to disappoint, but are closing the gap in performance with long-time Macy's stores, Chief Financial Officer Karen Hoguet said in a conference call with analysts.

The gap should close next year, but the converted Marshall Field's stores might take longer to gain acceptance, Hoguet said. Long-time Macy's stores were hurt by missteps in color and style in ready-to-wear clothing in the spring. Hoguet said Macy's executives believe they have the right fashions for fall, such as denim, wide-leg pants and novelty jackets and coats.

Executives saw good news in early sales of Martha Stewart's exclusive line of home fashions for Macy's: Martha's goods are already listed on 35 percent of bridal registries. The line of bedding, bath, cookwear and decorating kits will debut in all Macy's stores on Sept. 10 -- one day after the first anniversary of Macy's going nationwide -- though it already is displayed on the first floor of the State Street flagship store in Chicago.

Macy's is working to increase the number of exclusive and limited-distribution merchandise it sells. It will sell 19 collections by Chicago-based fashion designers at the State Street store, starting Oct. 9.

For the quarter ended Aug. 4, Macy's overall net income declined to $74 million, or 16 cents a share, from $317 million, or 57 cents per share, a year ago. Excluding May Department Stores' takeover costs of $60 million, or 13 cents per share, the company earned 29 cents per share.

Last month, it cut its forecast to 20 to 30 cents for the quarter, from its earlier forecast of 35 to 45 cents.

Sales slipped 1.7 percent to $5.89 billion. Macy's had initially expected sales of $6.1 billion to $6.2 billion in the period. Same-store sales declined 2.6 percent, short of Macy's forecast of an increase of 1.5 to 2.5 percent.

Analysts had forecast profits of 26 cents per share on revenue of $5.88 billion.

Macy's reduced its third-quarter profit outlook to 5 to 10 cents per share.

It expects earnings for the full year, without the merger costs, of $2.15 to $2.30 per share.

Macy's posts sharply lower 2Q profit

August 15, 2007

CINCINNATI -- Macy's Inc. said Wednesday its second-quarter profit fell by 77 percent, weighed down by its takeover of a rival, and warned that it would miss Wall Street expectations for the third quarter and the year.

Net income declined to $74 million, or 16 cents per share, from $317 million, or 57 cents per share, a year ago for the quarter ended Aug. 4. Excluding May Department Stores takeover costs of $60 million, or 13 cents per share, the company earned 29 cents per share in the latest period, compared with 33 cents in the 2006 second quarter.
» Click to enlarge image
Macy's second-quarter profit fell by 77 percent.
(AP)

Sales slipped about 2 percent to $5.89 billion from nearly $6 billion last year.

Analysts surveyed by Thomson Financial, who typically exclude one time charges like integration costs, had forecast profits of 26 cents per share on revenue of $5.88 billion. Last month, Macy's cut its third quarter profit outlook to 20 to 30 cents a share from 35 to 45 cents.

Macy's projected that third-quarter earnings, excluding merger costs, will now be 5 to 10 cents per share, with earnings for the full year, without the merger costs, of $2.15 to $2.30 per share. Analysts have projected 19 cents a share for the third quarter and $2.37 per share for the year.

Macy's stock fell below its 52-week low Wednesday, at $31.10, or down 63 cents. Shares have traded as high as $46.70 in the past year.

''While the second quarter was below our initial expectations, we did see improving sales trends through the quarter in former May Company stores and in home-related merchandise categories,'' said Terry J. Lundgren, Macy's chairman, president and chief executive. ''We are optimistic that our business can and will improve in the second half of the year, despite what appears to be a more challenging economic environment.''

Lundgren told shareholders at their annual meeting in May that disappointing sales results were partly due to strategic changes made too quickly at the former May Department Stores. Lundgren orchestrated Macy's $11 billion acquisition of May in 2005.

Macy's changed its name from Federated Department Stores this year after converting most of its former May stores -- including popular regional names such as Marshall Field's, Foley's and Filene's -- into Macy's in its push to make Macy's a national department store brand.

The turnaround of the former May stores hasn't progressed as well as expected, and the retailer also has been facing challenges such as a weakening home market, which has depressed its home furnishings sales.

For the first half of the year, Macy's sales totaled $11.81 billion, down nearly 1 percent from total sales of $11.93 billion in the first 26 weeks of 2006. For the first half, net income slid to $110 million, or 24 cents a share, from $265 million, 48 cents a share.

Macy's operates more than 850 department stores in 45 states, the District of Columbia, Guam and Puerto Rico under the names of Macy's and Bloomingdale's. AP

New Macy's distribution center will employ 130 fewer

August 14, 2007
BY SANDRA GUY sguy@suntimes.com
Macy's will build a new distribution center in southwest suburban Minooka to replace its existing distribution center at 4000 W. Diversey Ave., which will be shuttered in the spring.

The new 850,000-square-foot center will employ 210 -- 150 full-time and 60 part-time -- or 130 fewer workers than at the 1.55-million-square-foot center on Diversey. The new center, about 50 miles southwest of Chicago, will open in early spring 2008.

Macy's cut more than 200 jobs at the existing center earlier this year by outsourcing furniture delivery, reducing some interior-design services, and converting other systems. The center at one time served 44 Marshall Field's and Dayton Hudson stores.

Macy's spokesman Jim Sluzewski said the retailer will try to put displaced employees in other jobs. Employees who cannot find new jobs or who choose not to accept other positions will be eligible for severance pay and outplacement help, he said. Workers were given the news Monday morning.

Macy's will move a furniture clearance store at the Diversey site to leased space in a retail center near Fox Valley Mall in Aurora.

The new furniture clearance store will employ the same number -- 10 -- as the existing store. The new store is set to open this year.

The existing distribution center is housed in a six-story building that was developed in stages starting in the 1930s, and formerly run by Marshall Field's. The Minooka building will be one story. Macy's bought the Field's chain in August 2005, and turned Field's stores into Macy's in September 2006.

Macy's will sell the land on Diversey.

Tom Cole, Macy's vice chairman, said in a statement the new distribution center will be more efficient than the existing one and was necessary to accommodate Macy's growing online business.

"The Minooka site was selected following an exhaustive search of potential locations in Chicago and the surrounding region," Cole said. "We are proud to have elected to keep this facility in the state of Illinois."

Macy's employs 6,500 people in the greater Chicago area aside from the distribution center, including 2,400 in the city of Chicago.

A tale of two Julys in world of shops
ECONOMY | Retailers suffer, discounters enjoy sales gains

August 10, 2007
BY SANDRA GUY sguy@suntimes.com

Wary shoppers chose discount stores and off-mall department stores for back-to-school fashions in July, raising gloomy prospects for retailers heading into the fall season.

Macy's, owner of the former Marshall Field's department-store chain, said Thursday its same-store sales declined 1.4 percent in July, better than analysts' forecast of a 2.1 percent drop. Same-store sales, or sales at stores open at least a year, are considered a key sign of a retailer's health.

Total sales, which include new stores such as the Macy's in Bolingbrook, dipped 0.2 percent, to $1.6 billion, in the four weeks that ended Aug. 4.

» Click to enlarge image
Macy's State Street store in Chicago. The back-to-school shopping season had a disappointing start in July as consumers rattled by a weakening housing market and other financial pressures stayed away from stores and malls.
(AP/Brian Kersey, file)

Bon-Ton, owner of the Carson Pirie Scott & Co. chain, reported same-store sales in July dropped 7.6 percent at all of its stores, but the Carson's division by itself had a 1.5 percent sales decline. The Elder-Beerman chain's same-store sales plummeted 17.3 percent. Total sales declined 7.6 percent, to $194.3 million.

Bon-Ton's numbers, while disappointing, look even worse because they're being compared with last year's liquidation sales following Bon-Ton's takeover of the Carson's division of Saks, said Tony Buccina, vice chairman and president of merchandising.

Specialty stores also were hard hit, with steep declines in same-store sales at Aeropostale (12 percent), Abercrombie & Fitch (4 percent), American Eagle Outfitters (6 percent), Gap (7 percent), Pacific Sunwear (4.6 percent) and Wet Seal (7.2 percent).

Department and teen-specialty stores were hit by shoppers' concerns about high gasoline prices and a slumping housing market that's causing a credit squeeze, as well as a shift in the retail calendar that moved some back-to-school sales into August.

Those that reported strong same-store sales gains were: Target (6.1 percent), J.C. Penney (10.8 percent), and Wal-Mart (1.9 percent on strong grocery sales, at the high end of expectations), as well as the perennially strong high-end retailer Nordstrom (9.4 percent).

Analysts held out hope that shoppers are waiting until the last minute for discounts.

A Death In The Family

2007-03-29T00:13:00.000-07:00

The only thing sadder than an empty school is an empty department store. One is accustomed to there being the hustle and bustle of humans going about their activities with a purposeful stride and a clear intent about them. There is supposed to be a “constant” about the place and when there is not, it’s just spooky.

Once upon a time, Lord & Taylor and Marshall Fields were owned by the The May Company. There is a long and storied history behind both of these name plates and their brief glancing relationship was not destined to be long lasting. L & T (1826) was the oldest department name in the country and Fields (1852) was famous throughout the country for its innovations and quality. The road to divorce and death is a long and ugly one.

Let me say first off that May was the Death Star of retail, few if any mourn their passing. I worked for some May stores, H & S Pogues, L.S. Ayres, L & T and it was never pretty. They were known throughout the business as being cheap and dirty stores full of crap merchandise. Even L & T suffered, though they were spared the worst. Everyone knew that May bought them to burnish their image. Polish it all you want, since the middle ages man has known that no matter how much you polish it, you can't turn brass into gold.

The management was mean and stingy, attracting low end employees who were treated badly. There was always a ‘sale” of one variety or another, I don’t know that I ever sold anything full priced, since the shoppers were accustomed to waiting for markdowns, coupons and clearances.

Drama mamas part one

May also tended to lurched from self induced crisis to self induced crisis, gobbling up heritage stores and groups like Associated Dry Goods ( Robinsons, Stewarts, Goldwaters, Stix Baer, Denver Dry Goods, Ayres, Horne, and Caldor) in 1986, killing off the nameplates, and with it any goodwill left for them, driving them into the ground. May sucked and working for them was like a gulag.

After May bought ADG, they renamed/merged most of the stores except L & T, one of the few wise moves they every made. However, May just didn’t get it and they paid the most extreme price, being gobbled up by Federated in 2005 in a massive land grab not seen since the Sears/K-Mart bloodbath.

Drama mamas part two

Federated Department Stores also had a storied heritage, though not without it’s own reckless, egregious and hubris-filled moments. In a stereotypically greed-is-good moment, they were merged with the Allied Stores group in 1988 by Robert Campeau (idiot Canadian real estate Trump wannabe) whereupon the entire shebang went belly up into bankruptcy in 1990, taking such brand names as Bonwitt, Jordan Marsh, Stern’s, Ann Taylor, Brooks Brothers, and my home town Mabley & Carew with them.. I was ever so lucky to be working there when the shit hit the fan.

Then they decided to buy Macy’s.

Macy’s bought itself out in 1986 and then duked it out with Campeau Corp (the bad guys) in 1988 for Federated, walking away with Bullocks, Bullocks Wilshire and I. Magnin for their troubles. Then in 1992 the ship sank with all hands aboard, and yet another heritage nameplate was in the courts, hat in hand. After a long and difficult courtship, R.H. Macy & Co. finally merged with Federated Department Stores on December 19, 1994

A brief visit.

Fields was sold by Dayton-Hudson (Target) to May when even they couldn’t make it work and decided to abandon the department store tradition and focus on the upscale end of the discount market. Target survived. Fields didn’t. With the Federated/May merger Fields had 3 owners in 2 years.

And so, for one brief shining moment, Fields and L & T, sister stores by marriages of convenience and connivance lived nestled next to each other at 835 N. Michigan Ave here in Chicago at The Watertower Place shopping center. Both had been original anchor tenants of this impressive and wildly successful retail reinvention, the “vertical shopping mall” in one of the grandest shopping districts in the United States.

Sadly it was not destined to be. Federated, which was busy tinkering with its own heritage nameplate stores like Lazarus, Bullocks, I Magnin, Rich’s, Foleys, Burdines, Abraham & Straus, Filene's and Bloomingdales decided to flush them all and call the whole thing Macy’s. While most May shoppers welcomed it, Fields shoppers are STILL bitching about it, and Macys had admitted their own misstep in the America’s #3 market. Oooops!

Hugging Goodbye.

Federated decided that there was no room in the family for L & T, and sold them off to a real estate group called NDRC Equity Partners, LLC

“June 22, 2006--Federated Department Stores, Inc. (NYSE:FD)(NYSE Arca:FD) today announced that it has signed an agreement to sell its New York-based Lord & Taylor division to NRDC Equity Partners, LLC for $1.195 billion in cash. NRDC Equity Partners, based in Purchase, NY, is a partnership between principals of Apollo Real Estate Advisors, L.P. and principals of National Realty & Development Corp.”

They bought it for the real estate.

And so, on March 27, 2007, they turned the lights off next door. Lord & Taylor, we’ll miss you. If it’s any consolation, “only the good die young.”

Federated to change symbol to `M' after Macy's switch

2007-03-28T21:10:00.000-07:00

By Edgar Ortega and Cotten Timberlake
Bloomberg News
Published March 28, 2007, 5:05 PM CDT

Federated Department Stores Inc., owner of Macy's and Bloomingdale's, will change its stock symbol to ``M'' after it begins operating under the Macy's Inc. name.

The symbol will switch from ``FD'' effective June 1 if shareholders agree to the company name change at their annual meeting on May 18, the retailer said today in a statement.

Federated will ask investors to approve the name Macy's Inc., rather than previously planned Macy's Group Inc., because the single-letter stock symbol was available. Federated, which purchased May Department Stores Co. in 2005, has doubled the number of Macy's stores to 800 to create a nationwide chain. Macy's accounts for 90 percent of Federated's revenue.

The New York Stock Exchange is assigning ``M'' to a company for the first time since 1993. Investors have speculated that the exchange was reserving the symbol to lure Microsoft Corp., the world's largest software maker, from the Nasdaq.

``A single letter obviously has a lot of power and simplicity,'' said Federated spokesman Jim Sluzewski. ``When we had availability to the single letter, it made more sense to shorten the name to keep it as simple as possible.''

Shares of Federated, based in Cincinnati, fell 80 cents, or 1.7 percent, to $45.43 at 3:43 p.m. in NYSE composite trading. They increased 15 percent last year, less than half the 39 percent gain for rival J.C. Penney Co.

Under Chief Executive Officer Terry Lundgren, Federated converted 11 May nameplates, including Marshall Field's and Filene's, to the Macy's brand. It also operates the smaller Bloomingdale's chain, which has 38 stores.

The company, the second-largest department-store operator after Sears Holding Corp., was founded under the Federated name in 1929. It has traded under the ``FD'' symbol since 1992.

Macy's shoppers speak out

2007-01-10T20:17:00.000-08:00

Store battling to win back disenchanted

Robert Cherry, with wife Christine and daughters Devin, 9, and Fiona, 5, bought lots of items at the Macy's on State Street, but still finds it disappointing that it's not a Field's. (Al Podgorski/Sun-Times)

January 10, 2007

BY SANDRA GUY Business Reporter

The battle for the hearts and pocketbooks of former Marshall Field & Co. shoppers has prompted the top executive to write his own e-mail pleas.

Antagonists of the transformation to Macy's from Field's have deluged chatrooms and reporters with postings and e-mails.

Macy's management has countered with an aggressive campaign of its own, daily surveying hundreds of shoppers about their Macy's experience, and pleading with Field's loyalists to give Macy's a chance.

In one recent case, Robert Cherry, a 39-year-old father and a Darien native who now works as a general manager overseas, e-mailed Terry Lundgren, CEO of Macy's parent Federated Department Stores, which bought the Field's chain and nine other regional chains from May Department Stores for $11.9 billion in August 2005.

Cherry defended Field's "terrific brand equity" and recounted "how visceral people's connection to Field's is in Chicago.

"My mother worked her way through college at the Field's on State Street," Cherry said. "Even as a boy, I enjoyed going there."

Lundgren responded, writing that sales at Field's had declined for six years, and that the competitive landscape had changed dramatically in Chicago and nationwide.

"Regional department stores have struggled, and Marshall Field's was among the weakest performers on most levels," Lundgren wrote, and asked Cherry to try shopping at Macy's.

Cherry said he was surprised and humbled to receive the e-mail, and believed the message was from someone who was trying to save the department store.

Cherry led his family on a Jan. 2 shopping trip to Macy's flagship store, where they had lunch in the Walnut Room.

"We got a sense that the staff was making an extra effort to be helpful, and that the store was spruced up," Cherry said.

But the battle is far from won.

"At the end of the day, it's still disappointing to see the Field's brand gone," Cherry said.

Other shoppers have embraced Macy's without shedding a tear.

In an e-mail and interviews with the Sun-Times, Dee and Joseph Bryja, native Chicagoans and life-long Marshall Field's shoppers, said, "Customer service is exemplary at Macy's."

The Bryjas said they are pleased by the cleaner and brighter appearance of the Macy's flagship store at 111 N. State St. than at its predecessor Field's store, and by the salespeoples' easily identifiable black clothing.

The Bryja family exchanged more gifts from Macy's this Christmas Eve than they had previously bought at Field's.

Amy Hanson, vice chairwoman of administration at Macy's North in Minneapolis, where she oversees the Field's regional division's finances and operations, told the Sun-Times that surveys show shoppers can be won over by store redesigns, new merchandise and improved sales help.

Hanson, 48, rose through the ranks at Federated Department Stores in her 23-year tenure at the Cincinnati-based company.

Macy's executives read customer feedback every day, and take it seriously, Hanson said.

"I'm passionate about restrooms and fitting rooms," she said. "I want our customers to be 'wowed' by every moment in our stores."

Hanson said she has learned that she must communicate clearly because of misunderstandings. Some Field's customers believed incorrectly that Federated would build new Macy's stores in the Chicago area, while others are surprised to learn that her regional office is on the 9th floor of the Macy's store in downtown Minneapolis, where Dayton-Hudson was headquartered.

Field's loyalists continue to fault Macy's in e-mails and letters to the media. One shopper who asked to remain anonymous was exasperated by her bad experience buying towels at Macy's Web site, but she was impressed by the professional response of Ralph Hughes, former regional vice president otores for Macy's North. On Jan. 2, he was promoted to regional vice president of corporate communications for Federated.

Though Hughes' telephone call and his response were "extremely positive" and "exemplary," the shopper said Macy's will have to work hard to improve its online experience, but she added she would shop again at Macy's.

"I'm not angry at Field's," she said.

sguy@suntimes.com

WHAT'S NEW AT MACY'S

Macy's has new initiatives in the works:
• • The Macy's store at Oak Brook's Oakbrook Center will get a major overhaul, an informed source said. A Macy's spokeswoman said it's too soon to talk about any changes.
• • Macy's is moving ahead with plans to expand celebrity chef Rick Bayless' quick-service eatery, Frontera Fresco, which sells tamales, tortas and quesadillas. It will open inside Macy's stores at Oak Brook and in Sacramento and San Francisco, Calif., within the next year or so, Bayless said.
• • Frango Mints, a Field's favorite, will get its own cookbook, featuring recipes that use the confection. The Frango Cookbook: Simple Recipes and Sweet Ideas, will be sold starting this spring at 200 Macy's stores.

Sandra Guy

How retailer polls customers

January 10, 2007

BY SANDRA GUY Business Reporter

Macy's on State Street scored 78 of a possible 100 in a shopper survey released exclusively to the Sun-Times, putting it in the top 10 stores in customer satisfaction in Macy's North division. Macy's goal is to score 80.

The survey was sent at random to shoppers who had used a store credit card to buy merchandise from last spring through mid-December.

The Macy's North division, encompassing the 61 former Marshall Field's stores in eight states, sends about 250 of the random surveys each day, and had received 1,500 survey responses as of Dec. 16.

Though the Field's store wasn't transformed into Macy's until Sept. 9, the scores did not drop after the transition, said Amy Hanson, vice chairwoman of administration at Macy's North in Minneapolis, where she oversees the Field's regional division's finances and operations.

The survey asked customers to rate the store on their shopping experience; whether the store was "clean, neat and easy to shop," and whether salespeople were courteous and respectful. Each factor is rated on a scale from "disappointing" (zero) to "satisfactory" (50) to "very good" (75) to "outstanding" (100).

The Macy's customer survey program asks shoppers to provide feedback in two ways: the random survey, and via Web sites for Macy's [Macys.com/tellus] and Federated [fds.com, under the heading "Tell us what you think"]. Macy's North received more than 4,800 responses online through mid-December.

Each sales receipt includes the URL of Macy's Web site, and salespeople are supposed to circle it, sign the receipt, and ask shoppers to share their comments. Store managers are expected to respond to Web postings within 72 hours.

Meanwhile, Macy's and its owner, Federated Department Stores of Cincinnati, continue to use an independent company to conduct focus groups to get shoppers' opinions face-to-face, Macy's spokeswoman Jennifer McNamara said. Macy's held a focus group after the Sept. 9 name change, and will hold another early this year.

Chicagoan to run local Macy's

2007-01-10T20:08:00.000-08:00

Linda Piepho, the new Macy's North vice president who'll run the State Street store (left), greets an employee Tuesday at Macy's on State.
(Al Podgorski/Sun-Times)

Onetime Lord & Taylor exec assigned to former Field's

January 3, 2007

BY CHERYL V. JACKSON Business Reporter

Macy's has tapped a Chicago-bred retailing veteran to run the former Marshall Field's operations, including the State Street store.

Former Lord & Taylor executive Linda Piepho will become vice president of Macy's North's and store manager of the State Street location Feb. 9.

She'll replace Ralph Hughes, who is being promoted to the newly created Chicago-based post of regional vice president of corporate communication for Macy's parent Federated Department Stores Inc. Federated bought Marshall Field's stores in 2005 and converted them to the Macy's brand.

In the new job, Hughes will represent Federated and Macy's in the Chicago area through community and government relations, community giving and supplier diversity efforts.

Hughes said of the move, "It's designed to really strengthen our leadership team here in Chicago. Our business in Chicago is really important, and the transition is important. It's an opportunity for me to work more outside the store, and allow Linda to take on operations of the store internally."

The 24,000 Macy's employees whom long-time Chicago resident Piepho will oversee might want to know that her name is pronounced "pea-foe." At Lord & Taylor, she oversaw about 600 associates.

Piepho had been with Lord & Taylor for 23 years, starting as a sales associate, working a variety of management positions in Chicago, Detroit and St. Louis, and serving as vice president and general manager of Lord & Taylor at Water Tower Place. Most recently she held the same title at the Fifth Avenue store in New York.

As a college student, Piepho's mother worked part time at the Marshall Field's store on State Street, selling dolls and working in shopper services.

"I walked in the store and said, 'Oh, My God. How lucky am I to be coming home to run this facility?' " she said. "There's a huge affinity for the State Street location."

She attended Evanston Township High School, and in 1983 graduated from Carroll College in Wisconsin, where she studied education and communications.

Hughes has worked at Marshall Field's since 1992, serving as regional director of stores and store manager for various stores and divisions. He also was vice president and general manager for Federated's Rich's Atlanta, and vice president of merchandise management for the May Department Stores Co. in Florida.

Macy's operates in seven regional retail divisions, among them the Minneapolis-based Macy's North with its 63 stores, including 61 former Field's locations.

cjackson@suntimes.com

...and I have some bad news about the Tooth Fairy too

2006-12-13T23:03:00.000-08:00

Macy's reaching out to lure former Field's shoppers

By Sandra Jones
Tribune staff reporter

December 13, 2006

Macy's North is on the hunt for former Marshall Field's shoppers.

The Minneapolis-based division of Federated Department Stores Inc. is making phone calls, mailing letters, handing out $10 coupons and sending direct mail literature to customers who have not been shopping at the department store since it became Macy's.

"We're trying to find the people that were customers and didn't come back," said Frank Guzzetta, chairman of Macy's North division, in an interview. "That's a major strategy."

The division, comprising about 60 former Marshall Field's stores, has had a rough time since Macy's took over in September. The name change, a flood of unfamiliar merchandise and a shift in promotions have taken a toll on sales.

Shares of parent Federated, based in New York and Cincinnati, have tumbled 16 percent since late October to $38 as word spread of disappointing sales at the 400-plus stores, including Field's, that Federated purchased from May Department Stores Co. last year and converted to Macy's in September.

In the past two weeks two Wall Street analysts downgraded the stock to "hold" or "neutral," citing the drag the former May stores, which represent about half the company, are having on the total 836-store operation.

Banc of America Securities analyst Dana Cohen estimates that sales at the former May stores have declined between 7 percent and 11 percent from the year-ago period since the September conversion and fell 11 percent in November. The reason: Federated's move to quickly change the roughly dozen department store chains it acquired into Macy's jarred the customer, particularly in the Midwest, where Macy's is not well known.

"The key issue we are facing is that management miscalculated the impact of these changes and, potentially, the pace required to successfully execute them without seeing a big drop-off in the business," Cohen wrote in a report Monday.

Cohen predicts that problems related to the Macy's conversion will dog the retailer into next spring. She expects its strategy will eventually succeed.

Federated Chairman and Chief Executive Terry Lundgren is out to revive the department store as a place to shop. One chief reason for operating the giant chain under one banner, rather than a dozen nameplates, is to save money on advertising and marketing by running the same commercials and circulars nationwide.

While Macy's has kicked off its national campaign, it still needs to send separate messages to shoppers in the upper Midwest, where Macy's is new in town.

That's why Guzzetta is running a series of 17 newspaper ads in its three major markets--Chicago, Detroit and Minneapolis--aimed at reminding shoppers that Macy's still carries many of the items formerly found at Field's. The ads, running from Nov. 26 through Dec. 24, highlight separate products such as Waterford crystal, Dooney & Bourke handbags, Polo by Ralph Lauren and Frangos.

"We have a lot of autonomy," Guzzetta added. "The reason the division was created is so that we can stay close to the customer. We've developed a strategy of winning our customers back one at a time and making them understand who we are."

Guzzetta declined to comment specifically on sales, but said that when an area in the store is having trouble, he tracks down customers that used to shop there and seeks feedback.

Indeed, he has had an ongoing e-mail dialogue with one former Field's shopper who refuses to set foot in the store because he thinks it has changed too much.

"I said to him, `I hope you'll break down and buy something,'" Guzzetta said.

Retail consultant Keven Wilder predicts that shoppers have short memories and will eventually forget about the upheaval of Macy's first year in Chicago. But it is too late to do much about this holiday season, she said. Most retailers generate one-third of their sales during the holidays.

"They've made their decision," said Wilder. "They're going to have to ride it out. If Macy's can take a longer view and pack the store with fabulous merchandise, people will come back."

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smjones@tribune.com

Copyright © 2006, Chicago Tribune

Federated sells bridal unit

2006-11-17T10:40:00.000-08:00

Firms Split Bridal and Tux Business

By Cotten Timberlake and Dana Cimilluca
Bloomberg News

November 17, 2006, 10:20 AM CST

Federated Department Stores Inc., the second-largest U.S. department-store company, agreed to sell its bridal division in two separate transactions for a total of $850 million.

Buyout firm Leonard Green & Partners LP will acquire 269 David's Bridal wedding gown stores, as well as 10 Priscilla of Boston locations, for about $750 million, Federated said today in a statement. Men's Wearhouse Inc. is buying 511 After Hours Formalwear tuxedo stores for $100 million.

Federated decided to sell the unit to concentrate on its more than 800 Macy's stores. The company acquired the bridal chains through the $11 billion takeover of May Department Stores Co. last year. The Cincinnati-based company converted 400 former May stores to the Macy's name in September.

``It certainly helps Federated move towards the next step of the integration process,'' said Arun Daniel, an analyst with New York-based ING Investments LLC, which manages $40 billion in assets including Federated shares. The value of the deal was in line with investor expectations, he said.

Federated missed its own deadline to announce an agreement by August after putting the stores on the auction block more than a year ago. The company said it expects to complete the transactions in the first quarter of next year.

The Conshohocken, Pennsylvania-based bridal division had sales of $704 million in 2004, the most recent year available. Federated didn't release sales figures today. After Hours is the biggest U.S. formalwear chain.

Federated, which also owns 37 Bloomingdale's stores, rose 6 cents to $42.05 at 9:45 a.m. in New York Stock Exchange composite trading. Before today, it rallied 27 percent this year, more than double the 12 percent gain in the Standard & Poor's 500 Index.

Private-equity firms have agreed to buy about 67 U.S. retailers and restaurant companies so far this year, according to data compiled by Bloomberg.

In the biggest deal, Michaels Stores Inc. agreed in June to a $6 billion buyout by Bain Capital LLC and Blackstone Group LP. Luxury retailer Neiman Marcus Group Inc. was bought a year ago for $5.1 billion by Texas Pacific Group and Warburg Pincus LLC.

Federated sold May's Lord & Taylor division to a group of investors including Apollo Real Estate Advisors LP for $1.2 billion in October.

Federated has been using the proceeds of asset sales, including the disposal of its credit-card accounts to Citigroup Inc., to repay debt incurred in the May acquisition and to repurchase shares.

The sales are part of a consolidation push in the department-store industry that's been driven by sluggish sales. Saks Inc. in September sold its 38-store Parisian chain to Belk Inc., which had bought its Proffitt's and McRae's chains in July 2005.

Bain Capital, Kohlberg Kravis Roberts & Co. and Vornado Realty Trust agreed to buy Toys ``R'' Us for $6.6 billion in March 2005.

Credit Suisse and Banc of America Securities LLC advised Federated on the bridal-business sale.

Copyright © 2006, Chicago Tribune

News Flash!

2006-11-14T22:15:00.000-08:00

Macy's brand a tough sell in Chicago
Federated's chief says Field's change difficult

By Sandra Jones
Tribune staff reporter

November 14, 2006

Two months after changing Marshall Field's name to Macy's and facing the start of the critical holiday shopping season, Federated Department Stores Inc. Chairman and Chief Executive Terry Lundgren acknowledged Monday that winning over Chicagoans may be more difficult than originally anticipated.

Video: Macy's Christmas displays

"I've been here a lot because I know we have more work to do," Lundgren said in a speech Monday evening to the Turnaround Management Association at the Standard Club in downtown Chicago.

Lundgren, who visited Macy's State Street flagship earlier in the day, added that other markets in which the local department store chain's name was changed to Macy's have been "much easier to break into."

Federated purchased Field's from former parent May Department Stores Co. for $11 billion last year and converted about a dozen regional department store chains across the country to Macy's in September, doubling the number of Macy's nationwide to more than 800.

In a wide-ranging talk, Lundgren spoke of the "risky" but necessary decision to create one national department store brand name.

But it was a risk Federated had no choice but to take, Lundgren said.

"The regional department store chain had to change, it just had to," he said. "It was losing market share at every turn."

In response to a question from the audience, Lundgren recounted the day he came to Chicago last year to announce that Field's would be changed to Macy's, saying it took an emotional toll on him.

"The [media] just hammered me all day long," he said.

Lundgren said he looked for ways to keep the Field's name but decided it couldn't be done and still accomplish his goal of creating a viable national department store with the economies of scale to save costs on merchandise, TV advertising and even shopping bags.

Lundgren pointed to Field's failed attempts to expand into Texas and Ohio years ago.

"We looked at the Field's brand, we kept on thinking it through," said Lundgren. "[But] ultimately we decided we cannot expand the Marshall Field's brand." Talking to reporters after the speech, Lundgren declined to characterize the sales trend at former Field's stores, saying only, "It's a marathon."

And what about the Frango mints? Will production move back to Chicago as Lundgren pledged when he announced the name change?

"I'm going to do it," he said.

----------

smjones@tribune.com

Copyright © 2006, Chicago Tribune

AMEN!

2006-11-13T17:27:00.000-08:00

Richard Roeper wrote in the Chicago Sun-Times

Macy's in your face

Thought I would drop in on Marshall Field's-I-mean-Macy's to pick up a few items and to see how the transition was going. At first I thought they were paying tribute to Chicago with an "Under Construction" theme -- but then I realized they're still in the midst of overhauling things.

I was about 10 feet into the store when I was greeted by the first cheery salesperson, inquiring as to my well-being.

That was the first of at least a half-dozen such greetings in 10 minutes. I hadn't paused to look at a single item, and I was already tired of saying, "I'm fine," "I'm good," "I'm OK," etc. They literally drove me out of the store with all the how-you-doing.

There's a difference between service and serial harassment. Message to Macy's: Calm the f - - - down. Please.

2006-11-10T08:55:00.000-08:00

Stock Room Nightmare: On occasion we have to go into the stock room to try to find something, rather than try to call a stock locator, which takes forever. Futile at best

2006-11-10T08:52:00.000-08:00

OSHA Nightmare: This is our stock room, note the trollys and rods paicked in there...right in front of the fire exits

2006-11-10T08:50:00.000-08:00

Shit I have to deal with: do people live like this at home? thats almost $600 of designer stuff on the floor

2006-11-10T08:48:00.000-08:00

Shit I have to deal with: fitting rooms full of stuff

Tell Us What You Think

2006-11-06T21:01:00.000-08:00

>From: Marshall Field's Customer Service

>To: customer Name
>Subject: Tell Us What You Think
>Date: 11/4/2006 2:03:18 PM -0500
>X-OriginalArrivalTime: 04 Nov 2006 19:03:18.0970 (UTC)
>FILETIME=[E3E6A1A0:01C70043]
>X-JunkMail: NotJunk
>X-MFData: [4.815277 v2.3:3 n185 s2880 g22241 b22058
p0.004131 sN11 t1,494730]
>
>Dear customer Name
>
>
>Thank you for taking the time to share your thoughts about
your
>recent shopping experience at Macy's Water Tower Place. I
am pleased
>to hear that we provided you with a positive shopping
experience. I
>look forward to sharing your kind remarks with my entire
store team.
>They take great pride in offering our customers
well-presented
>quality merchandise in a friendly easy to shop store.
>
>We realize you have many shopping options and trust you
will allow
>us the opportunity to make Macy's your favorite store!
>
>Sincerely,
>
>Cynthia Nedeau
>Store Manager,
>Macy's Water Tower Place
>
>Customer Comments:
> First Name:
> Last Name:
> Address:
> City: Chicago
> State: IL
> Zip:
> Country: USA
> Phone:
> Email:
> Division: mno
> Location: 640014
> Source: Macys.com
> Overall: Outstanding
> Store Env: Satisfactory
> Assoc Behav: Outstanding
>Comments: First visit to the Water Tower store
>since change-over to Macy's.
>
>Associate Comments:
>
>Name: Me
>Assc. Number: Mine
>Dept: Mens
>Comments: Very helpful and courteous.

Young shoppers buying into department store makeovers

2006-10-17T20:47:00.000-07:00

By Sandra Jones
Tribune staff reporter

October 17, 2006

Viewed as stodgy and irrelevant, the traditional department store has been on a steady decline for more than a decade.

A generation of shoppers strayed from their parents' way of shopping, preferring instead hip specialty stores such as Abercrombie & Fitch and H&M, where trends are clear cut and navigating the stores is easy.

But some old-line department store operators, led by J.C. Penney Co., Kohl's Corp., and Federated Department Stores Inc., are taking a page from their upstart competitors.

They're launching edgy advertising and adding clothing and furniture lines that appeal to the young trendsetters who have money to spend.

It's starting to pay off.

Department store sales surged in September 8.4 percent, the fastest pace since January 1997, according to the International Council of Shopping Centers. And a respected holiday shopping report due out Tuesday is predicting big increases in store traffic for department stores this season.

More surprising, young adults, who once shunned department stores, are leading the charge back into them.

"Over the last couple of years, department stores, knowing that they are losing that customer segment, have been doing more things to bring them back," said Phil Rist, vice president of strategy for BIGresearch LLC, a market research firm in Columbus, Ohio.

And some young shoppers, like Jessica Mershon, 20, said they like department stores for some old-school reasons--like convenience.

"It's just easier because it's a one-stop shop," said Mershon.

Indeed, 79 percent of adults ages 18 to 24 plan to shop at department stores for holiday merchandise, the National Retail Federation found in a survey to be released Tuesday. That's up from 73 percent last year, 66 percent in 2004, and 60 percent in 2003.

The uptick is remarkable given that the department store industry has been shrinking for more than a decade. Department stores accounted for 3.96 percent of retail industry sales in 2005, down from 7.27 percent in 1993, according to the NRF. And the industry segment generated $86.7 billion in sales in 2005, less than in 1993.

Department stores' recent gains come as some specialty stalwarts for teens, including the Gap, are stumbling.

September sales at San Francisco-based Gap Inc., which includes the Gap and Old Navy chains, fell 3 percent.

Columbus, Ohio-based Limited Brands Inc. has had trouble with its namesake Limited Stores and offshoot Express. Both posted sales declines in the second quarter.

"Department stores are hitting the fashion cycle better than in the past," said Peter Morici, professor of business at the University of Maryland. "This is shaping up to be a catch-up year for department stores."

Most specialty stores bet on one big trend each season, and if they're wrong, sales can tumble quickly. Once the purveyor of fashion in the country, department stores became slow to react to shifting consumer tastes. Now, at least some of them are tapping into fashion trends more quickly.

Though the recent surge in department store sales has given new hope to a beleaguered industry, not all department stores are getting a lift. Sales at Sears stores have fallen for five years, and its owner, Sears Holding Corp., continues to search for ways to bring shoppers back.

Penneys, one of Sears' oldest rivals, has turned around in part because it has found new ways to appeal to younger shoppers. The Plano, Texas-based department store chain introduced younger and trendier merchandise in the past year, such as a.n.a., a line of women's apparel including skinny jeans and hobo handbags. Another draw is cosmetic line Sephora, popular with young adults, starting to be sold at Penneys and slated for a broad launch at its stores next spring.

Penneys has also wooed young shoppers with advertising buys on Fox Television Network's the "Teen Choice Awards" and, most recently, the "MTV Video Music Awards."

"For a while, J.C. Penney has had the image of, `That's where my mom shops or where my grandma shops,'" said Penneys spokeswoman Kate Parkhouse. "We are starting to see more younger people come into J.C. Penney."

Menomonee Falls, Wis.-based Kohl's and Federated, the parent of Macy's, have made similar moves, making over stores with modern fixtures and trendier merchandise.

Kohl's, traditionally known for its mainstream fashions and accessories, is in the midst of an image overhaul. It recently announced a deal with designer Vera Wang to launch an exclusive line of "Very Vera" merchandise in 2007. For September, sales at stores open at least one year--a key barometer of a retailer's health--rose 16 percent at Kohl's, 6.2 percent at Federated and 8.7 percent at Penneys. That's far ahead of the 3.8 percent September same-store sales gain nationwide.

Another sign of the department store's comeback: Forever 21 Inc., the fast-growing, trendy off-price chain aimed at young people, plans to open a 30,000-square-foot prototype department store at the Shops on Butterfield at Yorktown Center in Lombard next spring. The company, which started in 1983 as a women's apparel boutique, is expanding into men's and children's clothing, lingerie and accessories.

" "We think there is a place for department stores, and that's why we're trying," said Lary Meyer, senior vice president at Forever 21.

One reason why department stores must undergo dramatic shifts is to survive competition on all fronts from online retailing to discount chains and specialty shops.

Federated is leading the charge by going after a new generation with sleeker fitting rooms and runways of mannequins showcasing how to wear the latest fashions.

Federated bought May Department Stores Co. in 2005 and within a year wiped out almost a dozen regional names, including Marshall Field's, in an effort to create a national department store under the Macy's moniker.

----------

smjones@tribune.com

Lord & Taylor to leave city

2006-10-04T22:42:00.000-07:00

Water Tower Place store to close in spring as owner of indoor mall takes back space; fate of retailer's suburban outlets is unclear
By Sandra Jones
Tribune staff reporter

October 4, 2006, 9:40 PM CDT

Lord & Taylor plans to shutter its Water Tower Place store next spring, a move that diminishes the New York retailer's presence in the Chicago area and frees up one of the most prominent locations on the Magnificent Mile.

The decision to leave Michigan Avenue comes one day after investment group NRDC Equity Partners LLC acquired the 48-store chain from Federated Department Stores Inc. for $1.1 billion.

News of the closing follows the conversion of Marshall Field's, also at Water Tower Place, to Macy's last month and changes the face of one of the busiest shopping corners in the city. The two department stores opened as the anchors of Water Tower Place in 1975 and helped the indoor mall—a pioneer in bringing suburban-style shopping to the city—become one of the most popular tourist destinations in Chicago, with an estimated 20 million visitors a year.

Water Tower Place's owner, General Growth Properties Inc., has been eager to redevelop the Lord & Taylor space since acquiring the mall from Maryland's Rouse Co. in 2004.

NRDC, for its part, is concentrating on reviving the storied Lord & Taylor brand, particularly in the Northeast, where the retailer has been a fixture in New York for more than a century. The Purchase, N.Y.-based group, which also owns a stake in Linens 'n Things Inc., plans to put $150 million in capital improvements into Lord & Taylor stores and just hired former Saks Fifth Avenue CEO Christina Johnson to help them.

Lord & Taylor has suffered from neglect under a string of owners, most recently May Department Stores Co. It closed 32 of its weaker stores starting in 2003 and endured several turnaround attempts, losing its luster along the way.

Lord & Taylor is getting out of the Mag Mile property because the lease is up and General Growth wants to take back the space, said Johnson.

"This is not a decision of our making," said Johnson. "We would have liked to have remained."

Still, it is unclear if NRDC will keep the remaining four Lord & Taylor stores in the Chicago area. The Chicago-area stores combined generate roughly $120 million in sales, according to a person familiar with the stores. That's less than 10 percent of the chain's $1.4 billion in annual sales last year.

The remaining stores are at Northbrook Court in Northbrook, Woodfield mall in Schaumburg, Oakbrook Center in Oak Brook and Old Orchard in Skokie.

The Northbrook Court store is the most likely to be closed, according to a person familiar with the plans. General Growth is close to a deal to take the space back from NRDC and will most likely redevelop it.

General Growth officials declined to comment on the Northbrook store's future and declined to disclose plans for the Water Tower space.

"We're looking at a bunch of options," said Mitch Feldman, Water Tower's general manager. It will take three to six months to finalize plans, he said.

NRDC's Johnson also declined to comment specifically on the Northbrook store, but said, "We have no plans to close any stores."

Lord & Taylor's sales at the Mag Mile outpost have been declining for years, ringing up an estimated $25 million to $30 million a year, down from as much as $50 million in the store's heyday, according to people familiar with the store.

General Growth has been looking for ways to boost Water Tower's sales from a relatively mediocre $500 per square foot to as much as $900 within three to five years.

Department stores have traditionally paid minimal rent in exchange for their drawing power. Breaking up the seven-level, 140,000-square-foot Lord & Taylor space into smaller units aimed at specialty stores and restaurants would allow General Growth to generate high rents, said Allen Joffe, retail real estate broker at Baum Realty Group Inc. in Chicago. "Spaces like that don't come on the market very often," he said.

American Girl Place, located just down the street, looked at the site this year as a way to expand its doll store and playland for girls. Von Maur, the Davenport, Iowa-based department store, has also been eager to expand in Chicago and has had its eye on Lord & Taylor real estate.

American Girl officials couldn't be reached for comment.

New York based retail consultant Burt Flickinger predicts that despite Lord & Taylor's loyal customers in the Northeast, it has a chance to improve its business in Chicago, particularly as Macy's wrestles to attract shoppers disenchanted with its takeover of Marshall Field's.

"There is definitely a place for Lord & Taylor," said Flickinger. "When they've got their merchandising magic working for them, it's a very productive store. With consumers being very disappointed that Marshall Field's is gone, there's a great opportunity."

smjones@tribune.com

Copyright © 2006, Chicago Tribune

2006-09-27T18:41:00.000-07:00

The Mother Ship 09/27/06

2006-09-27T18:39:00.000-07:00

The old & the new: State Street 09/27/06

2006-09-27T18:25:00.000-07:00

Macy's on State Street 09/27/06

2006-09-24T22:15:00.000-07:00

The Christmas Store went up in the store on 9/22 May God have mercy on our souls

RETAIL REBRANDING

2006-09-08T16:36:00.000-07:00

Hundreds of Stores to Get Different Name -- Macy's
Familiar chains across the U.S. will fall under a single banner with Saturday's changeover.

By Abigail Goldman
Times Staff Writer
From the Los Angeles Times

September 8, 2006

Goodbye, Robinsons-May.

The end officially comes this weekend for the storied Los Angeles chain as Federated Department Stores Inc. completes a massive make-over that will rebrand shopping nameplates across America.

Houston is losing Foley's; Filene's will no longer be a Boston institution; Chicago is saying farewell to Marshall Field's; and Famous-Barr, based in St. Louis, is finished, along with seven former regional chains that also are becoming Macy's on Saturday.

But the question in the malls this fall is whether shoppers are ready to say hello to Macy's, the department store giant that doubles in size this weekend.

"I'm just kind of disappointed," mused Phyllis Jacob, a 66-year-old legal secretary from West L.A. as she perused the changes at her old Westside Pavilion Robinsons-May. "Maybe it's just something to get used to."

With much fanfare, parades and advertising like crazy, Macy's is throwing a nationwide party to officially unveil the renamed and revamped May Co. stores it bought a year ago for $11 billion.

Which stores benefit — Macy's or its competitors — will be unclear until Christmas or later.

"Competition is ferocious, make no mistake," said Kurt Barnard, president of Barnard's Retail Consulting Group in New York. "First of all, there is Target, there is Kohl's, J.C. Penney; there are so many others and they all have the opportunity to show their mettle."

"They are going to try their level best to steal market share from Macy's," he added, "but Macy's, in general, is well prepared."

Nationwide, Federated will be converting about 400 former May Co. stores, which operated under 11 different names including Robinsons-May, to the Macy's brand.

That will give the Cincinnati-based company, with more than $27 billion in annual sales, more than 800 stores in 45 states.

In California, of the 49 Robinsons-May stores Federated acquired, 26 were shuttered and 23 officially will be renamed Macy's on Saturday. In all, Federated will have 71 Macy's stores in Southern California for a total of 111 stores and 31,000 employees across the state. That's in addition to its six Bloomingdale's stores in California.

Federated is literally rolling out the red carpet as part of efforts to welcome customers into Macy's stores. Employees will distribute gift cards, host celebrity appearances, offer craft projects for kids and hand out as many cupcakes, jelly beans and other goodies as they can foist on passersby.

And to get the word out, the company is launching its largest-ever advertising blitz, with newspaper, magazine and billboard advertisements.

Radio and television spots in English and Spanish will feature a reworked version of the Motown hit "Dancing in the Streets" — calling out the names of cities getting new Macy's stores.

"We look at this as a once-in-a-lifetime opportunity," Federated Chairman Terry Lundgren told investors Wednesday at the Goldman Sachs Global Retailing Conference in New York. "We intend to bring affordable luxury and fashion to America with this launch."

Now all he needs is to boost sales and profits, something that analysts say will be a daunting challenge.

"I think the perception is that Macy's is a little higher fashion content and a little higher quality and a little higher price," said Bob Buchanan, a financial analyst with A.G. Edwards in St. Louis. "That perception, which does involve a dollop of reality, will probably shift some moderate shoppers over toward Kohl's and Mervyns and Penney's."

That's where the real money is, Buchanan said, because fewer customers buy at the higher end. Federated's challenge is to keep those moderate customers by keeping costs in line a tough battle when up against ultra-efficient players such as Kohl's.

"As I look at the whole equation, the big winner over the next 12 to 18 months is going to be Kohl's," he said. "I think the big loser could be Federated, because up until now, they've been unable to gain much efficiencies as a result of the merger."

Kohl's Corp., J.C. Penney Co. and Target Corp., declined to comment. Nordstrom Inc. did not return calls.

Across the country, regional department store chains traditionally have endured by catering to local tastes and offering shoppers a bit of local tradition: Frango Mints and Christmas windows at Chicago's beloved Marshall Field's stores, the annual Christmas tree lighting at Filene's in Boston and Macy's Thanksgiving Day parade in New York City.

The store names evoked images of hometown 19th century dry-goods salesmen done good: Lyman S. Ayres in Indianapolis, George Draper Dayton in Minneapolis, Joseph Winchester Robinson in Los Angeles, David May in Leadville, Colo.

Robinson, the son of a Massachusetts merchant, opened the Boston Dry Goods store at Temple and Spring streets in Los Angeles in 1883. It grew into a tony retailer with a fancy Wilshire Boulevard address at its best-known store in Beverly Hills.

Robinson's became a place that drew leading designers, top fashion models and European royalty to launch their collections. The store took on the May name a few years after merging with May Department Stores Co. in 1986.

But consolidation and years of battering by discounters dragged many of the department store chains into a cycle of flagging sales and dreary stores. Through mergers, or in ill-fated attempts to appeal to a wider array of shoppers, many of the once-proud chains slid into homogenous warehouses with racks of indistinguishable merchandise.

In a nod to tradition, Macy's promised Chicago that it would keep their mints and told Boston that the tree lighting would go on. In Southern California, however, few shoppers gave the changeover a second thought.

"With fewer and fewer department stores, whether it has a May name or a Federated name or anything else probably doesn't matter," said Michael Niemira, chief economist for the International Council of Shopping Centers.

Karen and Brent Byrd of Rancho Park said that although they loved the old Robinson's, the stores being changed over this weekend began to lose their luster back in 1993, when St. Louis-based May first added its name to the local signs.

"That was the death knell," said Karen Byrd, 54, who runs a radiology network. "May was a step down."

Taking in the new brighter, wider aisles at the Westside Pavilion store, with entryways already adorned by the bright red Macy's logo, the couple said they had higher hopes for the new store.

"I'm not sure Robinsons-May ever established its own identity," said Brent Byrd, a 50-year-old certified public accountant: "You didn't know it for great service or great merchandise, it just sort of went along."

Those who said they missed Robinsons-May mostly pointed to value.

"Me and my friends, we're all missing it," said Cristina Gregory, a 48-year-old jewelry designer from Santa Monica. "I hope they'll have more quality items at more affordable prices than what Macy's is known for."

In Southern California, the acquisition of Federated left some malls with duplicate stores and others with an empty anchor spot to fill. Glendale Galleria, Northridge Fashion Center and Lakewood Center, which had hosted both Macy's and Robinsons-May, will now just have a single Macy's store.

South Coast Plaza in Costa Mesa will keep the three Macy's stores it has had for the last few years: a Macy's, a Macy's Men's Store, and a Macy's Home Furniture store. The mall's Robinsons-May store will become a Bloomingdale's.

At the giant Del Amo Fashion Center in Torrance, Federated will operate a Macy's home store and, for the ultimate in convenience, two full Macy's stores in the spots that once held the two competitors.

"We're not only a survivor but a thriver," said Robert Mettler, chairman of Macy's West. "And to be able to do things uniquely different for our marketplace is very exciting."

Abigail.Goldman@latimes.com

Rechristened

Here are some of the department store chains that are becoming part of Macy's.

Robinsons-May: Robinson's founded in 1883 in Los Angeles and May in 1877 in Leadville, Colo.; the chains merged in 1993. Stores in California, Arizona and Nevada.

Foley's: Founded in 1900 in Houston. Stores in Texas, Oklahoma, New Mexico, Colorado and Louisiana.

Filene's: Founded in 1881 in Boston. Stores in Massachusetts, New York, Maine, New Hampshire, Connecticut, Rhode Island and Vermont.

Famous-Barr: Founded in 1911 in St. Louis. Stores in Missouri, Illinois, Indiana and Kentucky.

Marshall Field's: Founded in 1881 in Chicago. Stores in Illinois, Michigan, Ohio, Indiana, Wisconsin, Minnesota, North Dakota and South Dakota.

Hecht's: Founded in 1857 in Baltimore. Stores in Maryland, Virginia, the District of Columbia, Pennsylvania, North Carolina and Tennessee.

Kaufmann's: Founded in 1871 in Pittsburgh. Pennsylvania, Ohio, New York and West Virginia.

Meier & Frank: Founded in 1857 in Portland, Ore. Stores in Oregon, Washington and Utah.

A retail history

• 1877: May Department Stores founder David May opens his first store, a mining supply shop in Leadville, Colo.

• 1883: Joseph Winchester Robinson opens the Boston Dry Goods store at Temple and Spring streets in Los Angeles.

• 1891: Robinson's company is incorporated as J.W. Robinson.

• 1923: May Department Stores opens its first Los Angeles store.

• 1955: Associated Dry Goods buys J.W. Robinson.

• 1986: May Department Stores buys Associated Dry Goods; Robinson's and May stores continue to operate separately.

• 1993: Robinson's and May chains merge, forming the Robinsons-May store brand.

• 2005: Federated Department Stores buys May Department Stores.

• 2006: Robinsons-May stores are renamed Macy's.

Copyright © 2006, The Los Angeles Times

Macy's rolls out biggest ad campaign

2006-09-06T19:20:00.000-07:00

Store nameplate conversions prompt all-out Federated push

Tribune staff reports

September 6, 2006, 7:58 PM CDT

CINCINNATI -- Federated Department Stores Inc. will promote the conversion of 400 stores into Macy's with its biggest-ever advertising campaign beginning this week.

The marketing push, which starts Thursday, will make Federated one of the largest advertisers in the U.S. this year, Chief Marketing Officer Anne MacDonald said, without providing figures.

The company, which also owns Bloomingdale's, was 23rd last year with $1.45 billion in spending, according to Advertising Age.

Macy's first nationwide television campaign will promote the chain's "Way to Shop" theme and use a re-recording of the Motown tune "Dancing in the Streets." The ads come 18 months after Federated announced its $11 billion acquisition of May Department Stores Co. The company is converting stores to the Macy's name Saturday, doubling the total.

The company is ramping up its Spanish-language advertising as it gains more Hispanic customers in Florida, Texas, California and Colorado, MacDonald said. It's also marketing more in Chicago, Minneapolis and Boston, where its Marshall Field's and Filene's stores will disappear. The ads were designed by JWT Chicago.

"It's an invitation to the customer to see why Macy's is better and what they have to offer, and down the road that will be a successful process," said David Heupel of Thrivent Financial for Lutherans in Minneapolis. "In the interim, that will create some churn."

The campaign will run into November with "heavy frequency," MacDonald said. The promotion also includes thousands of free $10 gift cards and the mailing of 3.8 million catalogs.

"All around the country, those grand old retail names will disappear overnight," said Wendy Liebmann, president of consulting firm WSL Strategic Retail in New York. "It's one thing when you start from scratch. It's another thing when you kick out the old grandmother."

The company has to win customers made skeptical by their loyalty to the former store nameplates that will vanish, said Stephen Hoch, a marketing professor at the University of Pennsylvania's Wharton School in Philadelphia.

While the retailer says it ultimately will save money by advertising one Macy's brand nationally, such ads go only so far to sell apparel that differs from region to region, Hoch said.

The risk is that Federated will spend large sums of money to no avail, Hoch said. "The worst case is that it's a money pit," he said.

James Dion, founder and president of the Chicago-based retail consulting firm Dionco Inc., said the plans for a nationwide program of community service projects that will begin Sept. 15 in selected cities also was a good move.

"I think that any business or retailer has got to be perceived as giving back to the community," Dion told The Associated Press. "This resonates with people that Macy's is not just a big company coming in to suck money out of the local community."

Copyright © 2006, Chicago Tribune

FIELD'S FINAL DAYS

2006-09-05T08:19:00.000-07:00

Hard-core fans stay loyal to brand

In Chicago, Marshall Field's devotees are planning rallies, cutting up Macy's credit cards and vowing never to shop at the stores again

By Sandra Jones
Tribune staff reporter

September 5, 2006

Gail Heriot is taking the demise of Marshall Field's to heart.

The California lawyer dug into her own pocket this summer, spending more than $2,000 to print and distribute 25,000 "Keep It Field's" lapel stickers to similar-minded Field's fans. She mailed thousands of decals from her home in San Diego and flew to Chicago last month to hand out more near Field's State Street flagship--slated, along with the rest of Field's 61 department stores, to become Macy's on Saturday.

Few brands have inspired such a public outcry. But every once in a while folks who might never attend a political protest or campaign fundraiser rally together when a favorite product is taken away.

It happened with the Ford Motor Co.'s Thunderbird, and twice to the king of brands Coca-Cola Co. with Coke and Tab colas.

The prospect of losing a beloved soda or car can strike deep for true fans. To them, the loss seems terribly unfair and unreasonable, and they don't take it sitting down.

"Part of what drives people to rally or protest is when they feel there is a big power or corporate behemoth behind it," said David Ruder, managing director of Chicago-based risk assessment firm Adaptive Alpha LLC. "It's not just that something is going away, it's being taken away. The only power they have left is to protest."

With Field's, a relentless chorus of disenchanted shoppers has voiced its objections ever since owner Federated Department Stores Inc. disclosed its decision in September 2005 to mothball the Field's name along with about a dozen other regional department store names in an attempt to create a national brand.

In Chicago, Field's devotees are planning rallies, cutting up Macy's credit cards and vowing never to shop at the stores.

"It's been hard to explain to Californians, but I love Marshall Field's," said Heriot. "Some people love baseball teams. I love Marshall Field's."

Heriot developed her affection for Field's while living in Chicago for a decade after college. She has also lived in Washington, D.C., home of Hecht's, which Federated is also converting to Macy's. And she has lived in Philadelphia and shopped at Wanamaker, before it became Hecht's. But neither store struck a spark with her the way Field's did.

"Marshall Field's is special for a lot of reasons," she said. "It's unusual for a department store to be so intertwined with a great city."

On the day the name changes, a grass-roots organization called FieldsFansChicago is planning to rally at 9:30 a.m. at the corner of State and Washington Streets outside the Field's flagship.

Since founding the organization through a Web log, or blog, in November, James McKay says there have been thousands of posts from disgruntled Field's shoppers. McKay has never organized a rally and "sometimes feels like kind of a nut" as the reluctant leader of the Field's fans. But as the pressure built from the blog's posters to hold a rally, he stepped up. Changing the Field's name to Macy's is like calling the New York Yankees the Chicago Yankees or Wrigley Field Shea Stadium, McKay said.

Pat Craven, another fan, joined McKay in making 150 T-shirts inscribed with the motto "Chicago Shops at ... Marshall Field's (not Macy's)" and selling them for $20 through the FieldsFansChicago.org Web site and for up to $45 on eBay.

Craven hopes to convince a group of friends to ride their motorcycles to State Street and circle the Field's store wearing the T-shirts and carrying signs to protest the name change.

"We're standing up as free Americans exercising our right to say we are mad about the change," Craven said. "Field's is Chicago and Macy's has always been New York. My feeling is they don't care what the customer wants."

Macy's, for its part, is taking the dissent in stride and banking that once the name is changed, shoppers will discover that they like Macy's after all.

Frank Guzzetta, chairman of Macy's North, the Minneapolis-based division that operates Marshall Field's and other stores in the upper Midwest, estimates less than 1 percent of the Field's credit card holders have sent back their Macy's cards so far. Almost all of the complaints have come from the Chicago area, he said.

Guzzetta read and responded to most of the angry letters and in about 30 cases said he called customers himself.

Macy's isn't taking anything away, he said, but simply changing the name. The building, traditions and merchandise assortment will remain "fundamentally" the same, he said.

"When customers come to the store and see that we have what they want and see that they like it, that's the only way to win loyalty," Guzzetta said. "There are probably a number of people who won't give us a shot because to them it was about the name. It's not rational, it's emotional, and I can't change people's emotions. Our wish is the next generation will become emotionally attached to Macy's."

Such intense emotional attachment to a brand name is hard to come by, but when it happens, it's powerful. The quintessential example, say brand experts, is the New Coke marketing blunder in the 1980s.

Coca-Cola was losing out in blind taste tests to PepsiCo. Inc.'s sweeter Pepsi and feared losing market share to its No. 2 rival. So Coca-Cola shelved Coke and came out with New Coke, a sweeter recipe that beat Pepsi in blind taste tests.

Coke drinkers rebelled. Even though a new set of blind taste tests proved consumers still preferred the sweeter recipe of New Coke, their attachment to the old brand remained. A grassroots group formed claiming 100,000 members in a call to bring back the old Coke.

Coca-Cola reported receiving 1,500 calls a day to its consumer hotline, more than triple the typical rate. Eventually, Coca-Cola brought back the old formula under Coke Classic and shelved New Coke for good.

Similarly, thousands of Tab lovers called and wrote Coca-Cola in the 1980s when it changed the formula of the hip '70s cola in the pink can. Coca-Cola eventually relented.

Car lovers did the same with the Thunderbird a decade ago. Ford stopped production in 1998 because of declining sales but brought the car back three years later amid consumer outcry. It finally retired the model last year.

"Brand equity takes years and years and years to fully develop and flourish," said Torrey Foster, managing partner at Heidrick & Struggles' global consumer practice in Chicago. "A brand can't be created overnight and it can't be killed overnight."

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smjones@tribune.com

Copyright © 2006, Chicago Tribune

Fields Images

2006-08-31T21:17:00.000-07:00

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

Macy's star dims in suburb

2006-08-31T09:42:00.000-07:00

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

2006-08-31T09:37:00.000-07:00

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."

2006-08-28T18:02:00.000-07:00

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."

2006-08-28T17:59:00.000-07:00

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.

2006-08-28T17:54:00.000-07:00

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.

2006-08-28T17:53:00.000-07:00

The light well from the 2nd level

2006-08-28T17:52:00.000-07:00

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

2006-08-28T17:51:00.000-07:00

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

2006-08-28T17:48:00.000-07:00

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

2006-08-28T17:47:00.000-07:00

Backstage

State Street changes catch up to Carson's

2006-08-28T10:22:00.000-07:00

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

2006-08-25T21:29:00.000-07:00

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.

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

2006-08-22T23:41:00.000-07:00

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.

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smjones@tribune.com

Copyright © 2006, Chicago Tribune

Go home, Yankee imperialists!

2006-08-22T23:40:00.000-07:00

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?

2006-08-22T16:40:00.000-07:00

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

2006-08-15T20:09:00.000-07:00

$2480

This is it for other Federated stores

2006-08-14T22:01:00.000-07:00

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

2006-08-13T20:27:00.000-07:00

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

2006-08-13T20:22:00.000-07:00

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

2006-08-13T20:18:00.000-07:00

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

2006-08-13T20:17:00.000-07:00

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

2006-08-13T20:13:00.001-07:00

Marshall Fields, State Street, Aug 2006

2006-08-13T20:13:00.000-07:00

Marshall Fields, State Street, Aug 2006

2006-08-13T20:12:00.000-07:00

Marshall Fields, State Street, Aug 2006

FIELD'S FINAL DAYS

2006-08-13T19:35:00.000-07:00

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

2006-08-10T21:46:00.000-07:00

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...

2006-08-10T21:07:00.001-07:00

Today's Sales

2006-08-10T21:07:00.000-07:00

$1410.

Tough row to hoe at Field's

2006-08-10T21:06:00.000-07:00

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

2006-08-09T21:43:00.000-07:00

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.

2006-08-04T22:41:00.000-07:00

End of the day

Hoarding names no game

2006-07-23T21:25:00.000-07:00

Federated keeps tight grip on dearly departed department stores to protect its star brand

By Sandra Jones
Tribune staff reporter

July 23, 2006

Federated Department Stores Inc. is sitting on a treasure trove of mothballed store names, and Marshall Field's is about to join the heap.

The New York-based department store operator, which is slated to change Marshall Field's name to Macy's in September, has amassed a collection of more than 30 department store trademarks as it gobbled up regional chains.

Burdine's in Florida, Bon Marche in the Northwest, Broadway and Bullock's in Southern California, Block's in Indiana, Stern's in New Jersey, Rich's in Atlanta, Wanamaker in Philadelphia and Filene's in Boston. The list goes on.

Most of the names have been around for more than a century, a legacy of the immigrant entrepreneurs who moved to America and helped build the nation's cities. The founding families sold their stores years ago, but their monikers lived on.

Wedding dresses, baby shoes, lunches with mom, meeting places for first dates--the department stores in each town became interlaced with all sorts of family memories and personal histories.

Today, all the brands Federated has acquired over the years have disappeared, and the final 11 will be converted, along with Field's, to Macy's as part of Federated's plan to create a national department store.

Federated, for the most part, isn't using the mothballed brand names in any substantial way. And the retailer has expressed no interest in selling or licensing them. But it doesn't want competitors to gain access to the names, either. It's a common tactic, and one that has become more widespread, particularly in the technology industry, as American business consolidates.

"The value of companies today, whether it's technology or retail, is more and more about intangibles," said Ray Millien, a patent and trademark attorney at Ocean Tomo, a Chicago-based intellectual property auction firm. "Big companies will buy up patents just to take them off the market."

Exactly how much Federated's basket of store names is worth is hard to say. But at least two separate suitors have attempted to buy specific brands from Federated.

One group pursued the I. Magnin name, which Federated acquired in 1964 and stopped using in 1994, and the other sought Marshall Field's, according to people familiar with the negotiations. Both offers were spurned.

Federated spokesman Jim Sluzewski declined to comment on specific offers but said the company is "always looking for ways to use" the names.

"Those are assets we need and may use in the future, so we of course want to keep ownership of them," he said.

Federated Chairman and CEO Terry Lundgren is well-versed in the power of image. By combining a motley assortment of regional brands into one nationwide chain called Macy's, Lundgren hopes to resurrect the department store as a place to shop and fend off the relentless assault of discounters and specialty stores. The idea of keeping the local brand names alive, even if it's as simple as putting Burdine's name on a costume jewelry collection or Rich's moniker on a single boutique, would remind shoppers of the department stores they lost and make Lundgren's job that much harder.

"Federated is very intelligent in that they don't want to create their own competition," said Love Goel, chairman of Minnesota-based consulting firm Growth Ventures Group and a former Federated executive. "The money they could make by selling the brand is less material compared to the potential market share they could lose. The trade-off is pretty risky." At the same time, companies with storehouses of brand names need to use them from time to time in order to keep them alive. Federated, for example, can point to Field's plaque on the outside of the State Street store and an assortment of Field's souvenirs for sale to prove that name is still in use and prevent competitors from taking it over.

Typically, trademark names are considered abandoned under federal law if they haven't been used in three years, but there is a large swath of gray area in how to define use. Even an intention to use can keep a trademark alive in the eyes of the courts.

"The intent question is sticky," said Jerome Gilson, trademark attorney at Brinks, Hofer, Gilson and Lione in Chicago. "Many companies will do what they can to show modified use in some fashion."

Take the case of River West Brands. The Chicago-based brand revival firm waged a year-long battle starting in 2003 to gain access to the I. Magnin name by trying to convince the federal government that the trademark had been abandoned, according to documents filed with the U.S. Patent and Trademark Office.

Federated discontinued I. Magnin operations in 1994, selling some stores, including three stores in the Chicago area, and converting others to Macy's or Bullock's.

River West wanted to revive the I. Magnin brand and either license it to manufacturers of apparel and accessories, or work directly with a retail chain to develop products exclusive to that retailer, according to the patent office filings. The firm also had a preliminary agreement with the Magnin family through the estate of Cyril I. Magnin, which no longer has rights to the department store name, to share royalties in the venture, the filings said.

River West withdrew its petition in August 2004, about the same time that Federated resurrected the I. Magnin label and put it on sleepwear sold at Macy's. Officials at River West declined to comment.

Like many regional department stores, I. Magnin has a storied past. Dutch immigrants Isaac Magnin and his wife, Mary Ann, founded the store in San Francisco in 1876, bringing European fashions to society ladies and dance hall girls. Their offspring became colorful fixtures in San Francisco society, mingling with presidents and movie stars.

Similar tales surround department stores in other cities, putting Federated in the unusual position of owning well-established commercial names that connect romantically to their cities.

Nowhere is the attachment as strong as in Chicago where shoppers have threatened to cut up their credit cards and hold boycotts once the big store from New York swoops into town.

"I hate to think that department stores play as important role in our cultural memory as churches and colleges, but perhaps we've reached that point," said Siva Vaidhyanathan, assistant professor of culture and communication at New York University. "The Wanamaker's near me is now a big Kmart. It's the Kmart in Manhattan. We shop there because Kmart gives us stuff cheap. These are the brutal ebbs and flows of capitalism."

Whether there is a sustainable market for defunct department store names is still a question. But a few entrepreneurs have made a go of it.

A couple in Florida bought the Jacobson's name for $25,000 out of bankruptcy court last year and opened up one shop in Winter Park. The upscale Michigan-based department store chain shut its doors in 2002 after 134 years. It had 23 stores in Michigan, Indiana, Ohio, Kentucky and Florida. Owners Jon and Tammy Giaimo are looking to open more Jacobson's stores in the former markets.

"The reason I bought the name is that it represented quality and tradition," said Tammy Giaimo. "That warm and fuzzy feeling they got from [the old] Jacobson's gets people back in my store. They had such a loyal following."

Susie Hilfiger, the former wife of designer Tommy Hilfiger, resurrected Best & Co., a name familiar to wealthy New Yorkers. The upscale department store went out of business in 1971. A generation later, Susie Hilfiger acquired the abandoned trademark rights for free, opening a luxury children's store by that name in 1997 in leafy Greenwich, Conn., and a second outpost in 2001 at Bergdorf Goodman in New York.

Even River West, the group that lost its fight for the I. Magnin name, bought the North American rights to the name of Bonwit Teller, the defunct luxury department store, and plans to roll out fashion merchandise under the legendary name later this year.

"At a human level, I think [Federated] is making a mistake," says Al Gini, professor of business ethics at Loyola University's business school. "People want big-box stores for better pricing. But they also want that familiarity. The MBAs are saying we want a homogeneous brand, but psychologically, customers feel like they lost a friend."

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smjones@tribune.com

Copyright © 2006, Chicago Tribune

2006-07-16T21:14:00.000-07:00

2006-07-16T21:03:00.000-07:00

Test

2006-07-16T20:59:00.000-07:00