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Sat, Feb 10, 2001 EST
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Stern's Shutting Down, Eliminating 2,600 jobs
Associated Press
CINCINNATI — 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 and Bloomingdale'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 sold.

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 said.

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 payroll.

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, Zimmerman said.

"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.

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