CINCINNATI — Federated Department Stores is preparing a fresh foray into men’s apparel with a new private label.
At its annual shareholders meeting here, the company announced its plan to revamp the former Marshall Field’s Field Gear private label and launch it as the retailer’s newest men’s private brand.
“We love the name,” Terry Lundgren, president, chairman and CEO, said. “But it was on inexpensive sportswear.” The line is being refocused as an “extreme sportswear” label patterned after such performance brands as Under Armour and The North Face.
Calling these labels “authentic lines for athletes” the Field Gear brand is “right for product in our stores.” A spokesperson said the label will be rolled out to “all divisions where appropriate.”
It was also announced on Friday that shareholders approved a corporate name change that will replace the Federated moniker with Macy's Inc., beginning June 1. The company's stock will trade under the symbol, "M," on the New York Stock Exchange.
The name change, which was expected, indicates the $27 billion company's focus on the Macy's nameplate, which accounts for the overwhelming majority of its annual sales. Lundgren stressed however, that the shift does not indicate a lack of commitment to the company's higher-end brand, Bloomingdale's.
"Bloomingdale's is very important to our company but Macy's represents 90 percent of our business," he told shareholders. But with the name change, "now every time we talk about the company, there will be more and more exposure for Macy's and a way to extend the brand."
He stressed that there are no plans to spin off the Bloomingdale’s business. During his prepared remarks, Lundgren said Bloomingdale’s “has emerged as a very strong performer serving an upscale, contemporary customer.”
While Bloomingdale’s was a highlight, Lundgren admitted that the former May Co. stores continue to struggle. To counteract the trend, Lundgren said Federated will revert this fall to a more-promotional stance at those units. “We threw a lot of change at the May Co. stores very quickly,” Lundgren told a press briefing following the meeting. In addition to merchandising shifts Federated also significantly reduced the number of promotions it ran in those stores to match the cadence within the legacy Macy’s doors. That “pullback” in couponing forced many former May Co. customers to shop elsewhere.
“We still believe long-term that this is the right strategy, but the rate of change was too fast,” he said. “So we’ll be strengthening the [promotional] calendar for the fall season.”
The number of promotions will “be closer” to that at the May Co. doors last fall, he said, declining to be more specific on the number. Federated had reduced promotions in the spring season.
Lundgren stressed that since legacy Macy’s doors are performing well, “there’s no need to go back” to a more-promotional stance. “They will stay on that strategy.”
Calling promotions a “marketing tool drilled into consumers’ heads,” he said the goal is to eventually bring all the stores onto the same promotional calendar. “We have to wean them off promotions,” he said.
Lundgren said Federated will also move toward a different mix of media in its advertising efforts, employing more newspaper and television, or what he termed a more “public” approach. This is designed to attract the former May Co. shoppers who are less likely to have store credit cards and are thus harder to target with direct mail efforts.
On the men’s wear front Lundgren said sales in the category are significantly stronger in the legacy Macy’s doors than in the former May Co. units.
“The Macy’s legacy stores had a good first quarter, the May stores did not. The story in men’s is similar to the total picture,” he said, noting that “traditional product” has been the weakest area. The company has a stronger “neo-traditional and contemporary business” at the legacy Macy’s stores while May stores are more traditional, leading to the slowdown in those units.
“We have to go back and look at the balance and make sure it’s appropriate,” Lundgren added. “Our answer lies in the ability for you to walk into our stores and say: ‘You know who I am.’ We have to focus on attention to detail.”
Tailoring its assortment by market is one of five initiatives Lundgren identified at the meeting. The others are “stimulating improvement” in the struggling home furnishings business—which will be marked by the introduction of the Martha Stewart Collection this fall—along with continuing its marketing of the Macy’s name on a national basis. Improving technology, including rolling out 50,000 new point-of-sale terminals to stores over the next three years, and capitalizing on its strong employee team, rounded out the priorities for 2007.
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