Federated to Invest $130 Million in DTC Efforts

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Federated Department Stores will invest $130 million in its direct-to-consumer businesses over the next two years, the Cincinnati-based parent of Macy's and Bloomingdale's said yesterday.

As a result of the infrastructure improvements and service enhancements, the company expects to increase its DTC sales from $450 million last year to more than $750 million by 2008. Online sales already represent the fastest growing part of Federated's business, according to company chairman/president/CEO Terry J. Lundgren.

"Our online businesses have performed very well over the past several years, with consistent double-digit sales growth rates and improving profitability," Lundgren said in a statement. "To maintain the momentum, we recognize we need to invest to better serve additional customers who want to shop online for the type of fashion merchandise we sell, especially as Macy's and Bloomingdale's expand their store presence nationwide."

The Web sites include macys.com, bloomingdales.com, Bloomingdale's By Mail, macysweddingchannel.com and bloomingdalesweddingchannel.com. The initial steps of the planned improvements are scheduled to be in place by spring 2007. The investments in the online business are part of the company's capital spending plan of $1.6 billion this year and $1.1 billion-$1.2 billion next year.

The investments will include upgrading and enhancing the Web sites' content and the order management software systems that support them. As a result, Federated expects the Web sites to handle increased traffic and order capacity, improve service levels, enhance efficiency, facilitate additional personalization of gift packages and provide customers with more detailed information on order status and delivery schedules.

Federated also said it will build a new distribution center and warehouse management system in Portland, TN, to handle DTC orders. It currently does this from several distribution centers that supply its retail stores.

Kristen Bremner covers list news, insert media, privacy and fundraising for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters

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