THREE MORE FEDERATED CHAINS TO EXIT ELECTRONICS BUSINESS

NEW YORK — The electronics business appears to no longer have a place at Rich’s, Lazarus and Goldsmith’s.
The three chains — which together form a division of Federated Department Stores — will leave the electronics business by Christmas, according to an AP report Sunday. The retail space will be taken over by housewares and apparel.
“The electronics piece of our business — TVs, VCRs, camcorders, stereos and CD players — requires an increasing investment of space, dollars and management resources with diminishing returns,” Russell Stravitz, chairman and chief executive officer of the Rich’s, Lazarus and Goldsmith’s unit, told AP.
Federated executives could not be reached Sunday for comment.
Electronics are currently sold at 39 of the division’s 76 units, which are in Georgia, Alabama, South Carolina, Tennessee, Ohio, Indiana, Kentucky, West Virginia and Pennsylvania.
This wouldn’t be Federated’s first move out of the electronics field. In April, Macy’s East said it was dropping the category — once considered a strong traffic generator in department stores, but lately said to be more closely related to high costs and low margins.
At the time, Macy’s executives deemed it a bold move to bolster the store’s “core” businesses, particularly women’s special sizes, men’s wear and home furnishings,
Products from Sony, Panasonic, Toshiba, Aiwa, Magnavox, RCA and JVC, among other leading suppliers, had been sold at about 60 of the 90 Macy’s East full-line department store locations.
Last year, electronics accounted for more than $90 million in volume at Macy’s East.
The electronics started disappearing from Macy’s in May to make room for large-size labels such as Elisabeth (Liz Claiborne’s large-size line), as well as Gianni, Jones and Macy’s own Charter Club line, all offering special sizes.
Macy’s executives are also betting that the special-size business has been underplayed and has enormous growth potential.
As for electronics, Jim Gray, Macy’s East’s president and chief operating officer, said in April that after “evaluating the returns on investments by family of business, electronics is at the low end of the scale.”
“It’s been thoroughly studied,” Gray said. “Category killers are providing more intense competition. In order to meet their prices, it becomes almost a price war.”
Among Macy’s East’s primary competitors in electronics were J&R Music World, The Wiz and Circuit City. As for Rich’s, Lazarus and Goldsmith’s, the chief competition is coming from names like Best Buy, Sun Television & Appliances and Circuit City.
Other Federated divisions have also exited electronics, including Macy’s West three years ago, and Burdines and Bon Marche last year.
Bloomingdale’s dropped electronics several years ago, while Stern’s continues to sell electronics.

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