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Federated posts a loss

Steve Tripoli Nov 8, 2006

TEXT OF STORY

MARK AUSTIN THOMAS: Federated Department stores posted a loss of $3 million for its third quarter. Federated owns both Macy’s and Bloomingdales. There’s a lot of interest in the chain’s earnings. Many analysts feel it’s an early sign of how retailers will do during the coming Christmas season, but the figures may say more about how Federated is integrating its recent acquisitions. Marketplace’s Steve Tripoli has the story.


STEVE TRIPOLI: Federated got a slight case of indigestion trying to swallow 500 former May Company stores. That acquisition more than doubled Federated’s retail outlets.

Retail analyst Patty Edwards of Wentworth, Hauser & Violich in Seattle says loyal May shoppers still miss their old standbys.

PATTY EDWARDS: Part of that is due to the fact that the May Company stores served a consumer that was used to a slightly different set of merchandise, just a little bit downscale from the normal Macy’s and Bloomingdale’s consumer. And the May company consumer has not yet responded the way they had hoped.

Edwards thinks Federated can overcome that. She says the former May Company stores are getting a facelift as well as a merchandise makeover. And she says department stores can’t make someone else’s loyal customer theirs overnight.

EDWARDS: I think they can do it over time it’s, just going to be a process not an event.

Federated’s success at that and at spinning off some acquisition properties it never wanted will say a lot about its near-to-midterm future.

I’m Steve Tripoli for Marketplace.

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