Early history Federated Department Stores traces its corporate lineage to
F&R Lazarus & Company, founded in
Columbus, Ohio, in 1851. In the summer of 1929, months before the Wall Street Crash of 1929,
Fred Lazarus Jr. met with Walter N. Rothschild from
Abraham & Straus of
Brooklyn and
Edward Filene from
Filene's of
Boston on Rothschild's yacht in Long Island Sound. The three businessmen agreed to merge their stores and form Federated Department Stores, as a department store
holding company for
F&R Lazarus & Company (including its Cincinnati division, then known as
Shillito's),
Abraham & Straus, and
William Filene's Sons of Boston. In 1930,
Bloomingdale Brothers of New York joined. In the mid-1930s, a modern merchandising standard was set when
Fred Lazarus Jr. arranged garments in groups of a single size with a range of style, color and price, basing the technique upon observations made in Paris. As well, Lazarus convinced President
Franklin D. Roosevelt that it would help American economy to change the
Thanksgiving holiday from the last Thursday of November to the fourth Thursday, thus extending the Christmas shopping season. An act of Congress perpetuated the arrangement in 1941.
Black Friday became a nationwide sensation and the most profitable day for Federated. (Robert Lazarus Jr. worked at Federated until he died in 2013, the last remaining family member with an official role at the company.) In 1945, Federated moved its corporate offices to
Cincinnati. The latter half of the 20th century saw the company expand nationwide, adding
Rike Kumler of Dayton, Ohio (merged into
Shillito's in the 1980s to become Shillito-Rike's);
Burdines of Miami, Florida;
Rich's of Atlanta, Georgia;
Foley's of Houston, Texas;
Sanger Brothers and A. Harris, both of Dallas, Texas (which were merged to form
Sanger-Harris);
Boston Store of Milwaukee, Wisconsin;
MainStreet of Chicago, Illinois;
Bullock's, of Los Angeles;
I. Magnin, of San Francisco, California;
Gold Circle; and
Richway Discount Department Stores of Worthington, Ohio. Federated entered the supermarket industry in 1968 when it acquired the
Ralphs chain based in Southern California. In 1982, Federated acquired the
Twin Fair, Inc. discount store chain based in
Buffalo, New York, and merged it with Gold Circle. In 1983, Federated sold four shopping center properties to
JMB Realty.
Acquisition by Campeau Canadian real estate developer
Robert Campeau – who had taken over and dismembered
Allied Stores in 1986 – attempted to take over Federated starting in early 1988 which Federated fought off in a high-profile battle, with Macy's (at that time not part of Federated, but a rival), also submitting competitive bids of over $6 billion. Nonetheless, in April 1988, Federated gave in and agreed to a $6.6 billion takeover by Campeau. It was the largest merger in corporate history, barring the oil sector. Macy's paid Campeau $1.1 billion to acquire the 20-store
Bullock's/
Bullocks Wilshire and the 25-store specialty apparel chain
I. Magnin. Two years later, Federated filed for bankruptcy after Campeau failed to refinance the debt of Federated and Allied Stores Corp. In 1992, Campeau was ousted and Federated emerged from bankruptcy as a new public company,
Federated Stores, Inc., dropping the word "Department" from the previous company. As part of the reorganization, Federated sold the Ralphs chain to a group of owners led by
Edward J. DeBartolo Corporation.
Acquisition of Macy's Also in 1992, Macy's declared bankruptcy; Federated acquired it two years later, in 1994. The name of the once-main-rival of Federated, Macy's, would soon become the consumer-facing identity of most of Federated's stores. In 1995 Federated bought
Broadway Stores, Inc. and its California-based
Emporium-Capwell,
Weinstock's and
The Broadway chains. Macy's changed the nameplate of these three chains and Bullock's to Macy's, or in some cases, turned locations into Bloomingdales. In 2003, Federated changed the nameplates of almost all their remaining non-Macy's stores – the lone exception was Bloomingdales – to include the Macy's name, a rebranding internally dubbed Project Hyphen. For example,
Seattle-based
The Bon Marché became Bon-Macy's; Goldsmith's in
Tennessee became Goldsmith's-Macy's; Lazarus, Burdines, and Rich's also added "-Macy's" to their name. A year later, the hyphenated names were changed to simply Macy's, a rebranding process referred internally to as Project Star. Federated began
selling goods online in 1998, rather later than most contemporary large retailers; Federated ran a private bank, FDS Bank, which issued and maintained the majority of its own consumer credit card portfolio, was one of the last credit card banks to begin to allow its cardholders to access account information online (around 2004). In 1998, Federated settled an
SEC investigation for $14.46 million (equivalent to $ in ) due to unethical debt-collection practices. Federated routinely forced credit card holders/debtors to sign an agreement that legally bound them to repay their outstanding balances instead of having the unsecured debt discharge via the filing of
bankruptcy. Federated failed to file reaffirmation agreements with bankruptcy courts. As a result, the changes in the agreements were not legally binding. In 2001 Federated acquired
Liberty House of Hawaii as it emerged from
Chapter 11 bankruptcy. It was managed as part of Macy's West and all the store names were changed to Macy's. The department store chain
Stern's, a division of Federated, ceased operations in 2001 and most of its stores became Macy's stores. In 2005, Federated agreed to sell its credit card business to
Citigroup.
Acquisition of May On February 28, 2005, Federated Department Stores announced that it would acquire
May Department Stores company for $11 billion (equivalent to $ in ). Also part of the buyout was the bridal and formal unit of May, consisting of
David's Bridal and
After Hours Formalwear. Federated would also assume $6 billion (equivalent to $ in ) of May's debt, bringing total consideration to $17 billion (equivalent to $ in ). The deal would create the nation's largest department store chain with over 1,000 stores and $30 billion (equivalent to $ in ) in annual sales. To help finance the deal, Federated agreed to sell its combined proprietary credit card business (but still administered by FACS Group, a subsidiary of Federated) to Citigroup. The merger was completed on August 30, 2005, after an assurance agreement was reached with the Attorneys General of
New York,
California,
Massachusetts,
Maryland, and
Pennsylvania. As a result of the merger, Federated also in the process reacquired two of their former department store chains Foley's & Filene's (Which Federated originally sold to May Company), putting them back under the Federated Department Stores corporate umbrella for the first time since 1988. Federated announced plans to sell 80 store locations in 2006, having pledged in its settlement to sell most of them as viable businesses, with preference being given to a group of thirteen competitors. This number could fluctuate pursuant to Federated's negotiations with various mall landlords and its final decision regarding using former Macy locations for its luxury
Bloomingdale's operation. On January 12, 2006, Federated announced its plans to divest May Company's
Lord & Taylor division (55 stores in 12 states) by the end of 2006. On June 22, 2006, Macy's announced that
NRDC Equity Partners, LLC would purchase
Lord & Taylor for US$1.2 billion (equivalent to $ in ), and completed the sale in October 2006. On September 9, 2006, the former May Company store names
Famous-Barr,
Filene's,
Foley's,
Hecht's,
The Jones Store,
Kaufmann's,
L. S. Ayres,
Marshall Field's,
Meier & Frank,
Robinsons-May, and
Strawbridge's disappeared as Federated switched most of them to the
Macy's masthead and a few to the Bloomingdale's name. One of the consequences of this
rebranding is that several malls have two Macy's stores. In downtown Boston, Federated liquidated an acquired Filene's because it already had a Macy's (formerly a Jordan Marsh) across the street. The two stores have a combined floorspace of more than , more than two-thirds the size of Macy's New York City flagship store. On November 17, 2006, the bridal and formal unit was sold. David's Bridal and Priscilla of Boston were sold to
Leonard Green & Partners. After Hours Formalwear was sold to
Men's Wearhouse. == Operations as Macy's, Inc. ==