iPods, Frangos star in Macy's new line

Macy's owner Federated Department Stores plans to add an exclusive line of women's clothing by designer Elie Tahari, Frango mints and iPod vending machines at Macy's stores starting in September as part of a strategy to draw customers with unique merchandise.

Macy's will start selling the famous Frango mints that were a hallmark of the Marshall Field's stores that Federated is converting to Macy's. They have already been sold in Seattle-area stores since Federated bought Marshall Field's owner May Department Stores in February 2005, where Frangos were called "Frederick & Nelson The Original" after the license to sell Frangos had expired.

Now Macy's will take Frangos nationwide. Seattle's iconic Frederick & Nelson department stores closed in 1992.

The consumer-electronics vending machines, stocked and operated by Apple Computer reseller Zoom, will appear in at least 180 stores in the fall, and may ultimately sell mobile phones and handheld devices, he said. Macy's also will roll out to nearly 500 stores its new bed and bath offerings under its women's apparel private label Style & Co Home.

The clothing line, called T Tahari, will feature moderately priced career clothes, such as suits as well as denim. The iPods and other consumer electronics will be sold through Zoom vending machines.

Federated Chief Executive Terry Lundgren said electronics have been unprofitable for Federated in the past so he did not want to go with a full electronics department.

"I've wanted to be in electronics for a long time, but we had just never been able to figure out how to do it," Lundgren said.

Federated has been adding other more upscale and exclusive merchandise as it converts about 400 May Department Stores locations into Macy's. Lundgren pursued the $11 billion May purchase last year to create the pre-eminent department-store chain in the U.S.

The Tahari line will start off in 122 Macy's stores and be lower-priced than merchandise sold by the designer at Federated's 40 Bloomingdale's stores, Lundgren said.

Federated plans to add more Coach bags, $150 Citizens of Humanity jeans, MAC makeup, and exclusive merchandise and private-label clothes. The retailer is clearing out old May merchandise with markdowns, converting technology systems, realigning regional divisions, cutting as many as 7,000 jobs and seeking buyers for 80 stores.

The transformed May stores will become Macy's on Sept. 9 and debut with a national advertising campaign. The May deal made Federated the No. 2 U.S. department-store company after Sears Holdings and ahead of J.C. Penney.

Lundgren, 54, wants to make Macy's a national brand as well-known as Pepsi-Cola. He hired a new marketing chief and a new advertising agency, and is investing $130 million in the retailer's Web sites.

Federated's goal is to accelerate sales at the combined stores open at least a year to between 2 and 3 percent by 2007, Chief Financial Officer Karen Hoguet has said, up from 1.4 percent in 2005. May had average same-store sales declines of 3.8 percent in the four quarters leading up to its acquisition in August. Its new line of Martha Stewart home furnishings that will be sold only at Macy's will debut in 2007.

Information from The Associated Press is included in this report