Federated budgets another $100 million in direct-to-consumer development
Federated Department Stores Inc. reports that it will spend $100 million this year and next to support growth in its direct-to-consumer businesses, including Macys.com, Bloomingdales.com, Bloomingdale`s By Mail, MacysWeddingChannel.com and BloomingdalesWeddingChannel.com. The amount is part of Federated`s capital spending plans of $1.2 billion in 2007 and $1.1 billion in 2008.
“Our online sales continue to grow at a rapid pace as the national expansion of Macy`s and Bloomingdale`s attracts new customers to our stores, web sites and catalog," says Terry J. Lundgren, Federated`s chairman, president and CEO. "In particular, we are seeing exceptional growth in online sales in new Macy`s markets such as Illinois, Michigan, Minnesota, Missouri, Oklahoma, Texas and Utah.”
Lundgren says Federated’s online sales will exceed $1 billion next year. It reports $620 million in direct sales for last year. Direct includes catalog sales; Federated doesn’t break out online sales. "Supporting this pace of growth requires additional investment so we can scale up the volume of business while enhancing customer service, delivery efficiency and online site functionality," he says. Federated is No. 29 in the Internet Retailer Top 500 Guide.
The company will invest in a new 600,000-square-foot distribution center in Goodyear, AZ, which will serve primarily as the West Coast shipping point for macys.com. Construction will begin this spring and is scheduled for completion next spring. The facility will employ more than 500 full-time staff and is designed to accommodate further expansion of 400,000 square feet.
Federated also plans to spend on expanding its direct-to-consumer warehouse management system, improvements to the order management system and enhancements to Macys.com to support projected increases in customer traffic.
The company reports that these latest capital expenditures are in addition to $130 million that it spent this year and last in direct-to-consumer infrastructure improvements, primarily a new 600,000-square-foot distribution center to open later this month near Portland, TN, which will serve primarily as the shipping point for Macys.com to Midwestern, Southern and Central states.
In addition to its web sites, Federated operates more than 850 department stores in 45 states, the District of Columbia, Guam and Puerto Rico under the Macy`s and Bloomingdale`s brands. It has annual revenue of $27 billion.
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