Federated Invests More in Online Sales

Federated Invests More in Online Sales
Federated Department Stores, Inc. said Wednesday that it will invest approximately $100 million in 2007 and 2008 to support continued growth in its online businesses.

The funding, according to a statement by the national retailer, will be placed in its direct-to-consumer businesses, including macys.com, bloomingdales.com, Bloomingdale’s By Mail, macysweddingchannel.com and bloomingdalesweddingchannel.com. The amount is incorporated in Federated’s total capital spending plans, which includes $1.2 billion in 2007 and $1.1 billion in 2008.

“Our online sales continue to grow at a rapid pace as the national expansion of Macy’s and Bloomingdale’s attracts new customers to our stores, Web sites and catalog,” said Terry J. Lundgren, Federated’s chairman, president and chief executive officer. “In particular, we are seeing exceptional growth in online sales in new Macy’s markets such as Illinois, Michigan, Minnesota, Missouri, Oklahoma, Texas, and Utah.

“Currently, we anticipate our direct-to-consumer businesses will grow to more than $1 billion in sales by 2008 from about $620 million in 2006,” he said. “Supporting this pace of growth requires additional investment so we can scale up the volume of business while enhancing customer service, delivery efficiency and online site functionality.”

New investments will include the building of a 600,000-square-foot distribution center in Goodyear, Ariz., which will serve primarily as the West Coast shipping point for macys.com. Construction on this facility will begin in spring 2007 and is scheduled for completion in spring 2008. The facility will employ more than 500 full-time associates when completed and fully operational. The Goodyear distribution center is designed to accommodate a future expansion of 400,000 square feet.

Also included in the plan, are an expansion of the direct-to-consumer warehouse management system, improvements to the order management system, and enhancements to the macys.com Web site to support projected increases in customer traffic.

This new capital expenditure is in addition to approximately $130 million being invested in 2006-2007 in direct-to-consumer infrastructure improvements, primarily a new 600,000-square-foot distribution center to open later this month near Portland, Tenn. This facility will serve primarily as the shipping point for macys.com to midwestern, southern, and central states.

Federated, with corporate offices in Cincinnati and New York, reported fiscal 2006 sales of $27 billion. In addition to its online businesses, Federated operates more than 850 department stores in 45 states, the District of Columbia, Guam, and Puerto Rico under the Macy’s and Bloomingdale’s names.