QUOTE
Macy’s tries to wean customers off coupons
By Cotten Timberlake - BLOOMBERG NEWS
Updated: 05/20/07 6:37 AM
Federated Department Stores is trying to break its shoppers’ addiction to clipping coupons in order to boost earnings. In the process, it’s losing customers once loyal to the Kaufmann’s, Filene’s and Hecht’s stores it bought in 2005
Federated’s aim is to transform shopping habits by getting consumers hooked on consistent prices instead. The secondlargest department-store chain, which plans to change its name to Macy’s Inc. in June, may fail as companies such as Dillard’s Inc. have had little success after shoppers resisted such changes.
The strategy is risky for Federated and its investors because coupons can be “tough drugs to come off,” Charles Grom, a New York-based analyst with J.P. Morgan Securities, wrote.
Since paying $11 billion for May Department Stores Co., Federated has toned down promotions, added more expensive merchandise like Coach handbags, and sold more exclusive goods from designers like Oscar de La Renta and private-label brands under names like Alfani.
Federated, which doubled the number of Macy’s to more than 800 with the May stores, has also been sprucing up its locations by reducing clutter, improving dressing-room areas and adding televisions to them, and providing better signs in the stores.
The goal is to boost revenue, and ultimately Federated’s stock price, said spokesman Jim Sluzewski. The decision to cut the number of days coupons can be redeemed has hurt sales.
“May is going to take a longer time to turn around, partly because of the coupons,” said Arun Daniel, an analyst at ING Investments LLC in New York. Federated’s “earnings could come down, and that would be bad for the stock.”
Federated has cut the number of days coupons can be used by almost a sixth at the May locations, which previously offered coupons about 256 days a year.
Quarterly sales at stores open at least a year at the former May stores fell as much as 11 percent in the year ended in February, said UBS Securities LLC, more than twice the biggest drop of 5 percent a year earlier.
By Cotten Timberlake - BLOOMBERG NEWS
Updated: 05/20/07 6:37 AM
Federated Department Stores is trying to break its shoppers’ addiction to clipping coupons in order to boost earnings. In the process, it’s losing customers once loyal to the Kaufmann’s, Filene’s and Hecht’s stores it bought in 2005
Federated’s aim is to transform shopping habits by getting consumers hooked on consistent prices instead. The secondlargest department-store chain, which plans to change its name to Macy’s Inc. in June, may fail as companies such as Dillard’s Inc. have had little success after shoppers resisted such changes.
The strategy is risky for Federated and its investors because coupons can be “tough drugs to come off,” Charles Grom, a New York-based analyst with J.P. Morgan Securities, wrote.
Since paying $11 billion for May Department Stores Co., Federated has toned down promotions, added more expensive merchandise like Coach handbags, and sold more exclusive goods from designers like Oscar de La Renta and private-label brands under names like Alfani.
Federated, which doubled the number of Macy’s to more than 800 with the May stores, has also been sprucing up its locations by reducing clutter, improving dressing-room areas and adding televisions to them, and providing better signs in the stores.
The goal is to boost revenue, and ultimately Federated’s stock price, said spokesman Jim Sluzewski. The decision to cut the number of days coupons can be redeemed has hurt sales.
“May is going to take a longer time to turn around, partly because of the coupons,” said Arun Daniel, an analyst at ING Investments LLC in New York. Federated’s “earnings could come down, and that would be bad for the stock.”
Federated has cut the number of days coupons can be used by almost a sixth at the May locations, which previously offered coupons about 256 days a year.
Quarterly sales at stores open at least a year at the former May stores fell as much as 11 percent in the year ended in February, said UBS Securities LLC, more than twice the biggest drop of 5 percent a year earlier.
