Cincinnati, The repercussions of the massive Federated and May merger are playing out in the supply chain, with a major plan to close five distribution centers in 2006. The move is part of a nationwide consolidation of Federated Department Stores’ distribution center network to maintain efficiency and reduce duplication as it realigns its Macy’s operating divisions, as previously announced. The five facilities closing in 2006 are among 31 distribution centers operated by the company.
Closing in June 2006 will be distribution centers in Manchester, Conn.; Baltimore; Aurora, Colo.; Portland, Ore.; and Salt Lake City. Responsibility for merchandise handled by these facilities will be shifted to other distribution centers operated by Federated in each region of the country.
“Advances in logistics and distribution center technology allow us to handle a larger volume of goods more effectively with fewer facilities that are more regional in nature. This helps us to deliver fresh fashion merchandise to the selling floors of our stores more quickly and consistently across the country,” said Tom Cole, Federated vice chair. “Streamlining our distribution center network to reduce redundancy and expense also is important to our ability to deliver value to our customers and shareholders.”
Distribution center consolidations are consistent with Federated's previously announced estimates to realize approximately $175 million in cost synergies in 2006 and $450 million in annual cost synergies in 2007 and beyond as a result of the May Company merger.