Federated Department Stores Inc. will consolidate data center operations in St. Louis, MO, and Lorain, OH, as the company reduces duplication and excess capacity in its information technology organization.
The St. Louis and Lorain data centers were acquired by Cincinnati-based Federated in its merger with The May Department Stores Company, which was completed in August 2005.
“After our merger with May, we had excess computer systems and a redundancy in our capacity,” said Jim Sluzewski, a Federated spokesman. “The consolidation will streamline and improve our operations.”
Mr. Sluzewski added that the data centers do not handle any customer data.
“These are the systems that basically run our company,” he said.
A total of about 290 computer operations and systems development positions will be eliminated because of the consolidation. A phase-out will begin in early January 2007 and will be completed by June 30, 2007.
The St. Louis data center will be closed, affecting a systems development and computer operations staff of 195 employees. All non-management salaried systems development associates will be guaranteed a position at Federated Systems Group in Duluth, GA, if they elect to transfer.
At Lorain, about 95 employees are affected as most computer operations and the help desk portions of the data center are closed.
The systems development group, however, which is comprised of about 125 positions, will remain in Lorain, and will serve as a programming center for Federated’s systems. In addition, a small staff of IT professionals will remain in Lorain to support computer operations and a business continuity site.
All affected employees will be encouraged to apply for open positions in other Federated retail and support divisions. Those who work until a scheduled release date and then leave the company will be provided with severance and outplacement assistance.
Data center consolidations are consistent with Federated’s previously announced estimates to realize approximately $175 million in cost synergies in 2006. In 2007, Federated seeks to realize at least $450 million in annual cost synergies as a result of the May Company merger.
Federated, with corporate offices in Cincinnati and New York, is one of the nation’s premier retailers, with fiscal 2006 sales expected to be more than $27 billion. Federated operates more than 850 department stores in 45 states, the District of Columbia, Guam and Puerto Rico under the names of Macy’s and Bloomingdale’s. The company also operates macys.com and Bloomingdale’s By Mail.