Lehman Brothers Collection - Contemporary Business Archives

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Twentieth-Century Business Archives

Federated Department Stores, Inc. - Lehman Brothers Collection

Federated Department Stores, Inc.

List of Deals

Federated Department Stores, Inc., was organized in Columbus, Ohio, in 1929 as a holding company for founding members F&R Lazarus & Company, its subsidiary Shillito's, and Abraham & Straus department stores. The group was led by Fred Lazarus Jr., whose namesake company was the dominant retail store in Columbus. F&R Lazarus was founded as a men's clothing store in 1851 by Simon Lazarus. Shillito's was founded in 1830 and acquired by F&R Lazarus in 1928. Abraham & Straus was founded in 1865 and would go on to become the Federated group's sales and profits leader by the mid-twentieth century.

In 1930 Bloomingdale's joined the Federated group. This department store was selling European imports by 1886 and quickly became a leader in home furnishings. During the 1930s Federated established an administrative division of labor that placed department managers in charge of buying and selling all of the merchandise in their particular department. In 1934 Fred Lazarus revolutionized retail clothing sales when he adopted a French merchandising technique in which apparel was arranged according to size, rather than by color, price, or brand. This system became an industry standard. In 1939 Lazarus was a key figure in convincing President Roosevelt to move the Thanksgiving holiday to the fourth Thursday of November, thus lengthening the Christmas shopping season and giving retailers more time to sell at their busiest time of the year.

Federated's department stores assisted their customers during the Depression years by extending credit and establishing a reputation for community involvement in times of crisis. After World War II, the company faced the threat of increased competition from suburban shopping centers. Federated had to decide whether to break up or form a central organization focused on expansion. Federated opted for stronger organization.

The company grew a great deal in the 1950s through acquisitions and expansions. In 1956 Federated acquired Burdines, of Miami. In 1959 the company purchased Rikes' and Goldsmiths', the largest department stores in Dayton, Ohio, and Memphis, Tennessee, respectively. During this decade, sales at Federated's fifty main stores and thirty-two branches increased over 100 percent, and the group became the country's largest, most profitable department store company. Its members included the most prestigious department store chains in almost any given metropolitan area: Foley's of Houston, Sanger's in Dalla, and Filene's of Boston.

Federated continued to prosper in the 1960s. By the middle of the decade, the company's annual sales surpassed $1 billion. From 1960 to 1970, sales increased 250 percent, reaching $2 billion by 1970. In 1965 Federated purchased Bullock's and I. Magnin, both California-based department stores. Following these acquisitions, the company was prohibited from purchasing any more department stores until 1970. Federated then branched out into the supermarket industry and acquired Ralph's Industries, a West Coast supermarket chain, in 1968. The company also entered the mass-merchandizing industry that year with the creation of Gold Circle discount stores.

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