Federated to consolidate distribution network

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Federated Department Stores Inc. will close three distribution centers in early 2007 as part of a consolidation effort.

The goal is to reduce duplication, increase efficiency and streamline operations.

These affected centers were acquired in 2005 as part of The May Department Stores Co. purchase. They are located in Kansas City, KS; Minneapolis; and Warren, MI. Selected centers will begin phasing out operations on Feb. 4, 2007.

"Advances in logistics and distribution center technology allow us to handle a larger volume of goods more effectively with fewer facilities that are more regional in nature," said Federated vice-chairman Tom Cole in a statement. "This helps us to deliver fresh fashion merchandise to the selling floors of our stores more quickly and consistently across the country."

The volume currently handled by these centers will be absorbed by other Federated distribution centers in the region.

In addition, Federated, Cincinnati, plans to reduce the workforce at its distribution centers in Chicago, St. Louis and Bridgeton, MO, beginning in February. In Chicago, the company may outsource responsibilities for delivery and merchandise transportation to a supplier.

Meanwhile, Federated reported sales in the third quarter ended Oct. 28 totaled $5.9 billion, a 6 percent increase compared to the same period last year. On a same-store basis, Federated's sales were up 5.9 percent.

Federated also reported earnings of 3 cents per diluted share from continuing operations in the third quarter compared with diluted earnings per share of 87 cents for the same 13-week period last year.

For the year-to-date period, Federated's sales totaled $17.8 billion, up 39 percent over last year. On a same-store basis, year-to-date sales increased 3.5 percent.

During the same period, Federated reported diluted earnings from continuing operations of 41 cents per share compared with $1.76 per share in the same period of 2005.


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