Federated Department Stores Inc. will close
its Stern's department store group, eliminating about 2,600 of the
division's 7,400 jobs while converting most of the stores to Macy's
Federated said Thursday it plans to convert 19 of Stern's 24
stores, which are all in New York and New Jersey, to Macy's and
Bloomingdale's. The other five Stern's stores will be closed and
James M. Zimmerman, Federated's chairman and chief executive,
said the changeover is intended to strengthen Macy's and
Bloomingdale's in their home markets.
The shutdown of the Stern's retail group, based in Paramus,
N.J., will cost $130 million to $150 million, Federated officials
Zimmerman said closing the Stern's division will improve
Federated's cash flow and return on investment. The company also
expects to achieve its goal of earning $4 to $4.25 per share in
2001, excluding the costs of the conversion.
Approximately 4,800 Stern's employees in 17 stores that are to
convert to Macy's will keep their current jobs and move to Macy's
Another 2,600 Stern's employees work in the Stern's central
office and the stores that are to close or be converted to
Bloomingdale's. Those workers are to get priority consideration for
open jobs. The laid-off workers are eligible for severance and
outplacement benefits based on years of service with Federated.
The Cincinnati-based company has annual sales of $18.4 billion.
It operates more than 400 department stores in 33 states and Puerto
Rico under the names of Bloomingdale's, The Bon Marche, Burdines,
Goldsmith's, Lazarus, Macy's, Rich's and Stern's.
The decision to close the Stern's store group was difficult,
"Were it not for the unique opportunity Federated has to
consolidate our presence in the greater New York area and to
further leverage our Macy's and Bloomingdale's nameplates, we would
have continued pursuing the Stern's strategy successfully in these
markets for some time to come," he said.