A Rich Tradition
Seventy-nine years ago on the morning of March 6,
1929, millions of Americans opened their edition of The
New York Times to find a headline that would send the
business and retail world into a spin of excited chatter and
speculation – “Abraham & Straus and Filene’s to Unite.” The
announcement marked the beginning of the evolution
of what was to become one of the largest and most
influential corporations in retail history.

Federated Department Stores, Inc. (renamed Macy’s, Inc. in
June 2007) was born through the combination of Abraham
& Straus of Brooklyn, Filene’s of Boston, F&R Lazarus &
Co. of Columbus, OH, and Bloomingdale’s of New York.
Each of these retailers was an established, prominent
presence with a rich history of its own. In joining together,
they agreed to maintain their separate identities while
linking their financial interests. These pioneers recognized
the immense opportunity that lay before them and on
November 25, 1929, Federated Department Stores was
incorporated as a revolutionary new company in
American retail.

As Federated emerged in the years of the Great Depression
and World War II, it became apparent that the corporation
was equipped with both resilience and flexibility. It
adapted to the times by implementing innovative retail
firsts, such as “pay when you can” credit policies and
arranging merchandise by size rather than color, brand or
price. Not surprisingly, one of the best and boldest ideas
of the time belonged to Fred Lazarus, the retailing legend
and president of F&R Lazarus. He became concerned
in 1939 upon realizing that Thanksgiving would fall on
the last day of November. This meant fewer shopping
days in the coveted holiday shopping season between
Thanksgiving and Christmas, a circumstance that could
push many retailers from the black to the red. Mr. Fred,
as he came to be called, proposed a brazen solution when
he suggested to President Roosevelt that in the future,
Thanksgiving be anchored to the fourth Thursday in
November. The President supported this proposition, and
within two years it passed through Congress into law.
When the war came home to America in 1941, Federated
responded with the resolve of a company dedicated
to community and civic support. Selling war bonds,
volunteering with the Red Cross, helping in Victory
Gardens and participating in USO events became part
of its daily business. Thirteen percent of Federated’s
workforce fought in the war, and 56 died in action.

As the nation went on to recover from the strife of a
long war, Federated surged forward into a new era of
the company’s history. It was about to embark on a new
venture sparked by another epiphany credited to Mr. Fred.

During a trip to Houston, TX, in 1944, he was astonished
to find that the sizeable city had not a single department
store. It became obvious to him that Federated had to
begin acting on such opportunities that were there for
the taking. Upon his return, he convinced Federated’s
directors that remaining a holding company was no
longer conducive to achieving the kind of success possible
in the country’s booming retail industry. He suggested
a bold transition to an operating company that could
take advantage of the incredible growth and expansion
opportunities that lay ahead. After much debate and
some resistance, the directors agreed and Federated was
reconstituted as an operating company in 1945, with Fred
Lazarus as its president and Cincinnati as its headquarters.

Federated’s first priorities as an operating company were
expansion and acquisitions that spanned the late 1940s to
the early 1960s. By 1964, it was prospering at an extraordinary
pace. Its number of divisions had expanded from
the original five to an impressive 14, and annual sales for
the first time had skyrocketed to more than $1 billion.

The growth continued steadily into the 1970s as Federated
mirrored the population trend of expansion to the
suburbs. New malls and shopping centers were springing
up everywhere, and Federated was there to satisfy the new
demand for a retail presence in suburbia. This new trend
played a major part in the growth of Federated between
1964 and 1979, when its number of stores increased 400
percent and annual sales quadrupled to $4.8 billion.

It also was during this era of powerful and positive change
that Federated shifted its concentration from growth
through acquisitions to expanding the company’s retail
formats. Mr. Fred stepped down as CEO in 1966 and passed
the reins to his son. Ralph Lazarus recognized retail trends
had shifted demand toward better merchandise and more
brands, leaving the door wide open for Federated to satisfy
consumers whose demand for lower-priced retailers was
not being met. So by the 1970s, Federated started a
number of discount divisions that operated in Florida,
Texas and California. At the same time, Lazarus also set his
sights on real estate development through a wholly owned
subsidiary, Federated Stores Realty. This resulted in a new
string of regional shopping malls with Federated stores as
their anchors. Federated ended the decade of the ’70s on a
high note as it celebrated its 50th anniversary with the
acquisition of Rich’s in Atlanta, construction of a new
corporate headquarters building in Cincinnati and a total
of 20 divisions and 364 stores.

It became apparent in the 1980s, as the tone of the
industry changed dramatically, that Federated’s endurance
and resolve as a retail powerhouse were going to be
tested. Howard Goldfeder took the reins as CEO from Ralph
Lazarus in 1982 amid a period of changes. As divisional
consolidation was taking place between the company’s
Rike’s and Shillito’s operations, Federated planned for a
new retail concept called MainStreet, which it promoted as
a “junior” department store. The company also reinforced
its longstanding tradition of giving back to the community
with the establishment of the Federated Foundation in
1980, setting aside $15 million in earnings to create the
corpus of this charitable trust. Things looked stable for
the corporation until 1988 when a Canadian real estate
developer named Robert Campeau turned his sights on
Federated. A takeover ensued, and just two years later
Federated was forced to file for bankruptcy.

In perhaps the most difficult period of its history,
Federated’s strong operations and determined leadership
rebuilt the corporation into an even stronger company.
By 1992, Federated emerged from the ashes as a new
public company. Within three years, Federated had
doubled in size, acquiring Macy’s in 1994 and Broadway
Stores in 1995. It dove into the Internet and e-commerce
with macys.com and the acquisition of Fingerhut, a
company that was building a sophisticated e-commerce
infrastructure. When the e-commerce bubble burst and
the acquisition of Fingerhut became a very public failure
shortly thereafter, Federated responded with candor.
Chairman and CEO Jim Zimmerman declared that the
company remained confident in its resolve to take prudent
risks rather than choosing to stand still.

The new millennium saw Federated make the bold move
of acquiring long-time department store competitor, May
Company. Both companies had very similar histories and
cultures, and both represented decades of roll-ups of local
family-owned department stores. Each had similar sales
volume and stores.

United, a retail powerhouse was created with Macy’s
stores in 63 of the top 65 markets. We truly are “America’s
Department Store.” The acquisition was completed in
August 2005, nearly doubling the size of the company and
making Federated the fourth largest non-food retailer in
the country.

Seventy-nine years after its founding, Macy’s, Inc.
(formerly Federated Department Stores, Inc.) is one of the
nation’s most successful and respected retail institutions.
The company continues to prosper by adapting and
flowing with new demands on department stores in an
ever-changing society. Embracing the words and
philosophy of one of its founders, Fred Lazarus Jr.,
Macy’s, Inc. succeeds by striving to be “a living mirror of
our civilization in which we see the constant changing
needs and wishes of our people.”

Macy’s: A History
No one would have guessed that the small, fancy dry
goods store that opened on the corner of 14th Street and
6th Avenue in New York City in 1858 would grow to be one
of the largest department store retailers in the world.
But after several failed retail ventures, Rowland Hussey
Macy’s determination and ingenuity paid off at the age of
36 with the launch of R.H. Macy & Co. He adopted a red star
as his symbol of success, dating back to his days as a sailor.
First-day sales totaled $11.06 but by the end of the first full
year, sales grossed almost $90,000. By 1877, R.H. Macy &
Co. had become a full-fledged department store occupying
the ground space of 11 adjacent buildings.

Always the innovator, Macy’s is known for several firsts that
changed the retail industry. Macy’s was the first retailer
to promote a woman, Margaret Getchell, to an executive
position, making business history. Macy’s pioneered such
revolutionary business practices as the one-price system,
in which the same item was sold to every customer at one
price, and quoting specific prices for goods in newspaper
advertising. Known for its creative merchandising, Macy’s
was the first to introduce such products as the tea bag, the
Idaho baked potato and colored bath towels. Macy’s also
was the first retailer to hold a New York City liquor license.

By November 1902, the store had outgrown its modest
storefront and moved uptown to its present Herald Square
location on Broadway and 34th Street, establishing an
attraction for shoppers from around the world. With the
store’s 7th Avenue expansion complete in 1924, Macy’s
Herald Square became the “World’s Largest Store,” with
over 1 million square feet of retail space.

By 1918, R.H. Macy & Co. was generating $36 million in
annual sales. Yet, the prosperity of the retailer was never
more apparent than when the company went public in
1922 and began to open regional stores and take over
competing retailers. In 1923, the Toledo-based department
store LaSalle & Kock was acquired; the next year,
Davison-Paxton in Atlanta was acquired, and in 1936,
the Newark-based Bamberger’s was purchased.

To help celebrate their new American heritage, Macy’s
immigrant employees organized the first Christmas
Parade in 1924. The procession featured floats, bands,
animals from the zoo and 10,000 onlookers, beginning
a time-honored tradition now known as the annual
Macy’s Thanksgiving Day Parade.

In 1945, the company expanded west and purchased
O’Connor Moffatt and Company in San Francisco. Two
years later, O’Connor Moffatt stores, including the
landmark Union Square store that opened in 1866,
were converted to Macy’s after a survey indicated
that San Franciscans would welcome the name.
Macy’s California broke new ground with the first
department store flower show in 1946. What began
as a fragrance promotion in the cosmetics department
now annually welcomes the spring season, treating
visitors to a botanical, cultural and community spectacle.

In 1971, Macy’s Union Square store’s lower level, once
cluttered with bargains, was transformed into “The Cellar,”
changing the way customers shop for housewares.
Due to its success, the Herald Square store followed
suit five years later.

On December 19, 1994, Federated Department Stores,
Inc. (now known as Macy’s, Inc.) acquired R.H. Macy & Co.,
creating the world’s largest premier department store
company. Federated Department Stores operated over
400 department stores and more than 157 specialty stores
in 37 states.

A & S Department Stores were converted to the Macy’s
nameplate in May 1995. Also in 1995, Federated acquired
The Broadway Department Stores, bringing Broadway,
Emporium and Weinstocks to the Macy’s family, as well as
six former I. Magnin stores; some 46 stores were converted
to Macy’s. Following the lead of A & S, Jordan Marsh
Department Stores of Boston, already owned by Federated,
were converted to Macy’s in March 1996. In January 2001,
Macy’s absorbed 17 Stern’s Department Stores located
in New York and New Jersey. In June 2001, Federated
purchased the Liberty House operations in Hawaii and
Guam, bringing the proud Macy’s tradition and heritage
to the Pacific.

Macy’s entered 2005 with about 240 locations, primarily
on the East and West Coasts. With the conversion of
Federated’s regional store nameplates in March 2005,
Macy’s grew to about 425 locations across the country.
In September 2006, with the conversion of stores acquired
from May Company, Macy’s now serves customers
through more than 810 stores in virtually every major
geographic market in the United States, as well as the
macys.com Web site.