COLES MYER IN DEAL WITH FEDERATED

Byline: Arthur Hagopian

SYDNEY, Australia — Coles Myer Ltd., Australia’s leading retailer, has signed a letter of intent with Federated Merchandising Group (FMG), to carry Federated’s private brands in its Myer and Grace Bros. divisions.
The merchandise is expected to hit stores next March.
“We want customers to look to Myer and Grace Bros. stores for the latest in fashion,” said Warren Flick, the Sears and Kmart veteran who recently joined Coles Myer as chief operating officer of the apparel and home divisions.
“The proposed arrangement will enable us to be involved in the research, concept and design stages earlier than before,” he said.
According to a Federated spokesperson, the deal has not yet been completed, but should be in a couple of weeks. It would give Coles Myer exclusive rights to carry Federated’s private brands in the Australian market. These include Alfani in men’s wear and Charter Club and INC in women’s.
Federated inked a similar deal in Japan last fall with Kosugi Sangyo to sell its INC label and it also has an arrangement in Argentina. Last year, FMG signed a deal to become the sourcing arm for private label merchandise at Bon-Ton Stores, but that association does not involve the Federated private brands.
The impending deal comes at a time when Coles Myer recorded a 47 percent slump in earnings before interest and tax on a 6 percent sales dip in the half-year ended Jan. 28. Apparel sales fell 6 percent on increased units sold, mainly as a result of the new goods and services tax.
Coles Myer chief executive Dennis Eck said apparel sector weakness and poor post-Christmas clearance sales had particularly impacted the business. Margins were also adversely affected by lower volumes and a shift in the sales mix.
“Initiatives under way include improving service, introducing new national and international brands, store layout enhancements and productivity enhancements,” Eck said.
FMG is responsible for the development, sourcing and marketing of private brands across all divisions of Federated.