Federated Department Stores
will close some former May Stores credit offices in a bid to boost efficiency, affecting 1,175 jobs.
The company said it will phase out former May credit operations in Lorain and Parma, Ohio, and Houston beginning in spring 2006. Cincinnati-based Federated said it would close May's Great Lakes Data Center with 760 jobs, a credit remittance center in Parma with 35 jobs, and the Houston credit center with 380 jobs.
The company reiterated its pledge that there will be no workforce reductions as a result of the merger prior to March 1, 2006. Federated also said that executives at affected facilities will be asked to express their interest in relocating to other credit operations with open positions.
Federated said May's Earth City credit center in St. Louis will be retained as a fourth operational hub of Federated's Cincinnati-based financial, administrative and credit services division. Earth City will join facilities in Mason, Ohio, Clearwater, Fla., and Tempe, Ariz., in servicing private label and Visa credit card accounts.
"Consolidation decisions are the result of careful study regarding the size and location of facilities required to support the combined company's financial credit and administrative services needs," said FACS Group President Amy Hanson. "With the May Company merger, we will be able to combine the best of two excellent credit operations. By consolidating and streamlining our organization, we will maintain and improve the high quality and efficiency of service our customers and associates have come to expect."
Credit facility consolidations are consistent with Federated's previously announced estimates to realize about $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. Expenses associated with the consolidations are included in the previously announced estimate of roughly $1 billion in one-time costs spread over three years beginning in 2005.
On Tuesday, Federated shares fell 27 cents to $60.98.