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Bloomingdale's To Close E-Commerce Operations

By Nora Macaluso
Nov 30, 2001 10:43 AM PT

Federated Department Stores (NYSE: FD) said late Thursday that it will stop selling merchandise on its Bloomingdales.com Web site and will use the site instead as a "marketing site that supports the Bloomingdale's store brand."

Bloomingdale's To Close E-Commerce Operations

Federated, the parent company of both Bloomingdales and Macy's, said it plans to direct its e-commerce efforts toward the Macys.com site, which will narrow its offerings and eliminate less popular categories.

Despite the pullback, Federated chairman and CEO James M. Zimmerman said the company is still committed to its Internet strategies.

Jobs Cut

The change, effective February 1st, will result in the elimination of about 100 jobs and a charge of US$50 million to $60 million to fourth-quarter results, the company said.

The jobs to be eliminated include technical support and programming staffers, as well as merchandising and administrative personnel, Federated said.

Bloomingdales.com will continue to offer electronic order forms for the Bloomingdale's By Mail catalog, and online services for the site's bridal registry will be maintained in partnership with WeddingChannel.com, Federated said.

On Parade

Macys.com will also cut back on its online offerings, eliminating such slow-moving categories as petites, large sizes, career wear and swimwear.

At the same time, Federated said, Macys.com will expand its more successful categories, which include bridal, home, gifts and jewelry. Macy's also will close its catalog operation, which Federated said "primarily has served as a marketing vehicle for Macys.com."

Though other brick-and-mortar retailers are doing well online, upscale retailers have had a hard time selling high-end items, such as designer clothes over the Internet, Morningstar analyst David Kathman told the E-Commerce Times.

Even Amazon.com (Nasdaq: AMZN), the biggest online retailer, still does the most business in books, CDs and other products that are relatively inexpensive and easy to ship, Kathman said.

Tough Times

Federated said its aim is to get the most for its dollar.

"In the current economic climate, it is important that we use our available resources in the most productive way possible," said Jeffrey Sherman, chairman of Federated Direct, the New York-based division of the company's direct-sale division.

Federated said the reorganization will reduce expected losses from the Internet businesses and will keep them on track for reaching breakeven in 2003.

Summer Overhaul

In July, Federated relaunched the Macys.com site, touting new features and better customer service.

Federated, based in Cincinnati, Ohio, also owns the Bon Marche, Burdines, Goldsmith's, Lazarus and Rich's department-store chains, as well as catalog and Internet retailer Fingerhut.

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