Macy’s Spending $100M on OC Expansion
By JENIFER BELLANTONIO
Cincinnati-based Federated Department Stores Inc. plans to spend nearly $100 million to expand two Orange County Macy’s stores and open a new one in Westminster.
“We feel like now we’re going to be very competitive in the market,” said Rudy Borneo, vice chairman of Federated’s Macy’s West, a San Francisco-based division with 137 stores in several states and yearly sales of more than $4 billion. Orange County “is certainly one of the strongest growth markets that Macy’s West has in all of California,” he said.
Federated just finished the first phase of a $40 million renovation at South Coast Plaza,its flagship Southland store. Macy’s is building a new bridge set to open next month that connects the main store to a separate men’s store.
There’s already a pedestrian bridge that runs from the Macy’s Home store, which opened about two years ago, to the main store.
Macy’s has opened a new juniors section at its main South Coast store and is expanding its women’s, shoe and other departments.
“We’re attempting to enhance each of the businesses in the store that were highly productive but underspaced,” Borneo said.
Just down the freeway, Macy’s is nearly done with a $27 million, 2-year renovation and expansion of its store at the Shops at Mission Viejo.
The company decided to go ahead with the upgrade when the mall began its own massive overhaul, which finished more than a year ago.
The changes at the mall brought more anchors,and Macy’s competitors,such as Nordstrom Inc. and Saks Fifth Avenue.
Macy’s OC stores have “upside potential,” according to Borneo, and are a good fit with the area’s mix of traditional and contemporary shoppers. Macy’s also has stores in Brea, Santa Ana, Laguna Hills and Newport Beach.
“We’ve had a strong business in all of those markets,” Borneo said.
But 2001 was a tough year for retailers. Parent Federated has reported back-to-back months of declines in same-store sales. To cut costs, Federated has shut down its Macy’s By Mail catalog (but still offers Bloomingdale’s By Mail), stopped online sales at Bloomingdales.com and is revamping the offerings on Macy.com.
Earlier this year, Federated announced plans to shut down and sell one of its struggling businesses, Minnesota-based catalog retailer Fingerhut Cos., and laid off 3,300 workers.
Macy’s West also felt a pinch, Borneo said.
“Unfortunately, in the marketplace we had both the Mission Viejo and South Coast Plaza (stores) under renovation,” Borneo said. “The compounding factors of renovation and the economy had a negative impact. But we’re starting to see a turnaround in the business in total and Orange County. Mission Viejo is already starting to trend significantly better.”
The company has at least one more OC store on the books. Macy’s is spending about $30 million to build a 175,000-square-foot store at Westminster Mall, which is undergoing a massive renovation.
The store, set to become the mall’s fourth anchor, is expected to open in early November, according to Borneo.
Will there be more Macy’s to come? Borneo didn’t give specifics, but said, “Federated Department stores is always looking at real estate deals.”
