Federated Eyes Bigger E-Business

Cincinnati, Federated Department Stores, Inc. plans to invest about $130 million over the next two years to boost its direct-to-consumer businesses, including macys.com, bloomingdales.com, Bloomingdale's By Mail, macysweddingchannel.com and bloomingdalesweddingchannel.com. “On-line sales represent the fastest-growing part of our business and an outstanding opportunity for continued progress as we serve millions of new customers nationwide through our acquisition of May Company," said Terry J. Lundgren, Federated’s chairman, president and CEO. “Our customers have told us they appreciate the convenience of shopping on line as well as in our stores. This cross-channel integration is a vital component of our ability to maximize the potential of the nationwide Macy's and Bloomingdale’s brands.”

The company expects its direct-to-consumer segment to grow to more than $750 million by 2008, up from about $450 million in 2005.

Key investments include upgrading content and order-management systems, and building a new 595,000 sq. ft. distribution center, designed specifically for direct-to-consumer orders.

"With the initial steps of our planned improvements scheduled to be in place by spring 2007, we expect our direct-to-consumer sales to grow to more than $750 million by 2008 from about $450 million in 2005," he said. These investments are part of the company's capital plan for spending $1.6 billion in 2006 and between $1.1 billion and $1.2 billion in 2007. Groundbreaking for the new facility, to be built in Portland, TN, is expected in February 2006, with completion in spring 2007.

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