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Federated To Close Five Distribution Centers

By Home Furnishings Business in on January 2006 Federated Department stores will close five of its 31 distribution centers this year as part of its ongoing consolidation to realign its Macy's operating divisions.

The closings and consolidation will cost the company about $1 billion over the next three years. The company said it expects to realize about $175 million in cost synergies this year and $450 million in 2007 and beyond because of the May Co. merger.

Distribution center consolidations are consistent with Federated's previously announced estimates to realize approximately $175 million in cost synergies in 2006 and $450 million in annual cost synergies in 2007 and beyond as a result of the May Company merger.

The closings will impact 750 employees. The centers in Manchester, Conn., and Baltimore will close in June. Centers in Aurora, Colo., Portland, Ore., and Salt Lake City, will close in August.

"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," Tom Cole, Federated vice chairman, said in a release issued this week. "Streamlining our distribution center network to reduce redundancy and expense also is important to our ability to deliver value to our customers and shareholders."

The company will offer affected employees transfers to other Federated facilities, and severance packages will be provided to employees laid off as a result of the closings.

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