A&S NAME TO VANISH AS FERERATED REALIGNS STORES IN NORTHEAST
Byline: David Moin
NEW YORK — Another venerable name in retailing will soon disappear.
Beginning April 30, the 17 Abraham & Straus units, including the Brooklyn flagship, will be converted into Macy’s, Stern’s or Bloomingdale’s, in a sweeping Northeastern realignment of Federated Department Stores.
Tuesday’s announcement, which had been expected for months, adds weight to speculation that Federated will convert divisions in other regions of the country to capitalize on Macy’s broad popularity. Future conversions could also lead to more cost savings through consolidations.
Melding the Macy’s name into other Federated stores also raises the possibility of creating a cost-effective national TV advertising campaign promoting Macy’s. Such national chains as J.C. Penney and Sears Roebuck have effectively strengthened their images via television.
Recent reports have focused on Federated putting the Macy’s sign atop its Lazarus doors, which are in the Midwest, and The Bon in the Northwest, but Federated also operates Burdines, Rich’s and Goldsmith’s stores in the South, Jordan Marsh in New England and Bullock’s in California.
However, Hal Kahn, chairman and chief executive officer of Macy’s East, told WWD, “This decision [on A&S] has no bearing on any other divisions within or outside of Macy’s East. We haven’t spent our time debating names. We’ve spent our time on assortments, presentation and spacing decisions.”
“If you take the emotionalism away, it was the right decision,” Kahn added. “A blending of both Macy’s and A&S is in order.”
A&S, founded 129 years ago and a fixture for many New Yorkers, has developed strong businesses in moderate women’s sportswear, foundations, fashion jewelry and watches. A&S and Macy’s East have strong special-size businesses, but Macy’s is stronger in better and higher-priced women’s merchandise, private labels, cosmetics, and has generally been pulling market share from A&S.
In another development, Macy’s East is reportedly closing its fashion office. Federated Merchandising is expected to take over the function and started this month intensifying its market efforts, including devoting a day or two each month to visit resources that are not sold at its stores.
Through its merger with R.H. Macy & Co. last December, Federated now operates 346 department stores in 35 states and has annual sales exceeding $14 billion. The company also operates more than 100 specialty stores.
A&S stores did a combined $900 million in volume last year. Executives said that the $500 million Jordan Marsh chain, which along with A&S is already operated by Macy’s East, will continue under its current name.
As part of the realignment, Bloomingdale’s will sell its Garden City store to Sears, which will take over the site in February 1996, and move into A&S in the Roosevelt Field Shopping Center. With 285,000 square feet, it will be Bloomingdale’s second largest branch next to the 293,000-square foot unit in Paramus, N.J.
The store will close as A&S on May 28, after a closing sale that begins April 2, and will be remodeled before opening as Bloomingdale’s on Nov. 1.
The A&S store on 33rd Street in Manhattan will become Stern’s, though possibly only temporarily. Federated agreed last September with the New York State Attorney General to sell that site and five others, including Bloomingdale’s in Garden City, A&S in Massapequa, Macy’s in White Plains, and two Stern’s units in Flushing and Brookhaven, N.Y., to satisfy antitrust issues.
Officials from the Attorney General’s office said Federated’s announcement Tuesday does not negate its agreement to sell the 33rd Street store, but it is examining the situation.
As previously announced, the A&S store in Woodbridge, N.J., is being sold to Sears, with the store slated to close Feb. 19. In addition, Stern’s is taking over the A&S store at Sunrise Mall on April 1 but is closing its own Sunrise Mall store March 31. That store is also being sold to Sears. The A&S Sunrise store will close Feb. 19.
On Tuesday, Federated said four other A&S units, in Smith Haven, Nanuet and White Plains, N.Y., and in Monmouth, N.J. will become Stern’s.
Macy’s nameplates will be put on A&S stores in downtown Brooklyn, Huntington, Manhasset, Valley Stream and Yorktown, N.Y.; Paramus and Short Hills, N.J.; and Trumbull, Conn.
In addition, the Carle Place A&S furniture unit on Long Island will be converted to Macy’s.
There is also an A&S in the Queens Mall on Queens Boulevard, and a Macy’s store nearby. That configuration is under study and an announcement will be made soon.
The 16-unit Bloomingdale’s — which, despite a weak December, reportedly had a very strong profit year, rising to 9 percent operating profits from around 5 percent in 1993 — is being primed for expansion, even though most of the A&S locations are being turned over to Macy’s and Stern’s.
Bloomingdale’s plans to open a store in Aventura, Fla., by fall 1996 or early 1997; and has approval from the Federated board to open units in Huntington, N.Y., Atlanta and Beverly Hills, though sites have not been nailed down in those locations. Stores in Chestnut Hill and Bergen, N.J., and White Plains, N.Y., will be renovated. Sales rose to $1.3 billion last year from $1.1 billion a year before, according to sources.
Recently, there have been rumors in financial circles that Bloomingdale’s could eventually be sold, but high-ranking Federated officials denied them.
Bloomingdale’s wanted to open in the South Coast Plaza center in Costa Mesa, Calif., but was thwarted by anchor stores there, which reportedly feared the competition, as noted in WWD.
Bloomingdale’s chairman Michael Gould said profits increased last year, and he cited a strong gross margin performance, increased regular-priced selling and expense reductions. He declined to elaborate on the results.
Gould said moving Bloomingdale’s to Roosevelt Field, about 10 minutes south of the current Garden City site that is scheduled to close in early December, will facilitate larger departments for men’s wear and fashion accessories and stronger areas for women’s apparel and domestics.
Federated said that while some of the store conversions involve only name changes, other transactions are more complicated. The end result, however, will be passage of the A&S nameplate from the New York/New Jersey retail scene.
Allen I. Questrom, Federated’s chairman and chief executive officer, in a statement, said, “In the long run, a store’s name is not as important as the quality and traditions it represents. The finest traditions of A&S are being preserved, and will be carried on by Macy’s, Stern’s and Bloomingdale’s. These are names that customers in the New York area and throughout the Northeast already know and trust, names that have been around for 150 years and that share common roots, and that fact alone will make this transition a lot easier.”
Federated said changeovers from A&S to Macy’s or A&S to Stern’s are expected to occur overnight or over a weekend at the end April, in most cases involving no disruptions in store hours.
Macy’s East plans to spend approximately $25 million in 1995 on remodeling the converted A&S locations. Scheduled to get under way within the next month in selected locations are projects including improvements to store lighting, fixtures, visuals and interior painting; the addition of designer and private label shops in some locations, and the upgrading of point-of-sale equipment. In addition, the exterior of the Fulton Street store in Brooklyn is scheduled to get a facelift this spring.
At units converted to Stern’s, there are plans for more than $15 million in remodeling, including new fixtures and visuals. Stern’s, as the anchor of Federated’s moderate-priced department store business, is expected to continue expanding its presence in the New York/New Jersey area.
All active A&S credit card customers in good standing will receive Macy’s credit cards beginning in April. A&S customers who want Stern’s credit cards can apply for these cards at any Stern’s location.
Until April 30, A&S customers will continue to use A&S charge cards in A&S stores. In addition, A&S merchandise returns will be accepted at Macy’s after the April 30 conversions, but not before that date. A&S gift certificates are already redeemable at Macy’s.
It is not yet known how many store employees will be affected. Some employees may continue working in the same locations, while others may be offered positions at nearby stores in their current division. Those employees not retained will be offered benefit packages that include severance and outplacement. The only exception is the A&S Roosevelt Field store where approximately 550 employees can apply for positions in the new Bloomingdale’s, as well as for other positions elsewhere in the company.