Federated Moves Ahead With Burdines-Macy’s Merger

In conjunction with its broader national branding strategy for Macy's, Federated Department Stores, Inc. announced plans for converting six of Macy's seven Florida stores to Burdines-Macy's while closing one other in markets where Burdines and Macy's stores currently overlap.

As previously announced, Burdines and Macy's stores in Florida
will begin operating as Burdines-Macy's beginning January 30, at which
time Burdines also will assume buying and management responsibilities
for Macy's Florida operations.

“With the co-branding of Burdines and Macy's in Florida, beginning
early next year, we will have extended the marketing potential
inherent in a national Macy's brand to all of our traditional
department store retail operations across the United States,” said
Terry J. Lundgren, Federated's president and chief executive officer.
“We've been pleased thus far with the benefits of expanding the Macy's
brand in all of our regional markets, and we believe the excitement
and positive customer response we have seen elsewhere will be
replicated in Florida as this strategy continues to unfold.”

New store configuration plans for the three South Florida malls
that include both a Burdines and a Macy's are as follows:

• Aventura Mall – The current Burdines location will be
  converted to a Burdines-Macy's store featuring men's apparel,
  home merchandise and, for the first time in this location,
  furniture. The current Macy's at Aventura will be reconfigured
  to focus on fashion apparel for women and children.
  Renovations could get underway as early as May 2004.

• The Gardens of the Palm Beaches (PGA) – The current Macy's
  location will be converted to a department store featuring
  women's, men's and children's fashion apparel and accessories.
  The Burdines store in that mall will be converted to a
  home-oriented department store that also will feature
  furniture, a category new to this market. Both conversions are
  expected to get underway in June 2004.

• Boynton Beach – The current Burdines store in Boynton Beach
  Mall will continue operating as a full-line Burdines-Macy's
  department store, while the current Macy's in Boynton Beach
  will close in September 2004.

Macy's four other Florida locations – The Falls in Miami,
Plantation, City Place in West Palm Beach and the Mall at Millenia in
Orlando – will be converted to the new Burdines-Macy's nameplate, as
will all of Burdines 56 stores in the state.

Store renovations at Aventura and The Gardens may involve
temporary store closings, and the company is developing a transition
strategy for employees at those locations. During the spring season,
the company will attempt to offer comparable positions in other
Burdines-Macy's locations in the area to as many Boynton Beach Macy's
store employees as possible.

“We are excited about these forthcoming changes, which will bring
our Florida customers the best of both worlds,” said Timothy M. Adams,
chairman of Burdines. “Burdines-Macy's will combine our regional
expertise with one of the most powerful names in retailing, creating
one focused and highly energized department store.”

Adams added that the Burdines-Macy's partnership will enable each
of the company's Florida stores to continue to respond more directly
to local customer needs while capitalizing on the expanded resources
and buying power that Macy's national reputation delivers.

One-time costs related to the store conversions and closings are
expected to total approximately $35-40 million, of which about $9
million (virtually all of which is non-cash) was booked in the third
quarter of 2003. Of the remaining $26-31 million, an estimated $5-10
million will be booked in the fourth quarter of 2003 (included in
fourth-quarter guidance of $2.15-$2.20 a share) and the remainder in
fiscal 2004. Approximately $7 million of these one-time costs relate
to markdowns, which will reduce gross margin. These markdowns will be
necessary in order to make merchandise assortments congruent. Once the
stores are converted, the company expects total sales to be reduced by
approximately $50 million, although the EBIT impact is expected to be
minimal. Capital required to convert the stores will be funded within
the company's existing capital budget.