The new owner of Hecht's department stores plans to begin closing the chain's Arlington headquarters early next year, eliminating 1,033 jobs there as soon as March.
The Arlington employees have the option of applying for jobs with the new owner, Federated Department Stores Inc., and would be eligible for severance pay if new jobs are not found. Federated plans to eliminate 5,167 other jobs around the country as it phases out the headquarters of other stores it acquired when it bought May Department Stores Co. last month.
In a statement issued yesterday, the company also announced plans to convert the Hecht's store on Wisconsin Avenue in Chevy Chase into a Bloomingdale's. The 34 Hecht's stores in the Washington area and Pennsylvania, most of which are to be renamed Macy's next year, are to be operated from the Macy's East division in New York.
The fate of many of the stores Federated purchased has been unknown since it announced in February that it planned to buy May for $11 billion in cash and stock.
Since then, Federated has been wrestling with how to showcase its two flagship brands -- Macy's and Bloomingdale's -- while folding in the May chain's 13 department and specialty store chains. Among those chains are Filene's, Robinson's May, Famous-Barr, and L.S. Ayres, all of which also will be renamed Macy's.
"We must concentrate on our best national brands and reduce costs so we can deliver outstanding value to shoppers," Terry J. Lundgren, Federated's president and chief executive, said in the statement. "By announcing these changes we can begin more specific planning for the future."
Though Federated had previously signaled its plans to change the Hecht's name, it said little about the Marshall Field's and Lord & Taylor stores, widely regarded as the May chain's most prestigious brands.
Yesterday, Federated said it would let go of the Marshall Field's name. All 62 Field's stores, most of them in the Midwest, will adopt the Macy's name by fall 2006. No decision has been announced yet on Lord & Taylor, which owns eight stores in the area including one a block away from the Hecht's store in Chevy Chase.
Federated also said it planned to sell the bridal group that operates hundreds of David's Bridal, After Hours Formalwear and Priscilla of Boston stores nationwide.
This summer, in announcing that the Hecht's name would disappear within a year, Federated said nothing about what would happen to the salaried and hourly employees in Arlington who support the 67-store chain. Yesterday, it said it would begin interviewing those employees in February to assess if they can be offered them jobs elsewhere.
"We're trying to fit the round pegs into the round holes if we can," said Carol Sanger, a spokeswoman for Federated. "We need to start talking to people and figure out what's there. We need to find out who they are, what are their interests, and do they want to stay with the organization."
Some of the changes, such as the job cuts, are meant to save money. Federated hopes to reduce costs by $175 million next year and by $450 million in 2007. Other changes are aimed at matching the right stores with the right demographics.
Case in point: The Hecht's store under construction on Wisconsin Avenue, near the Friendship Heights Metro stop and next to a long-established Hecht's, will be a Bloomingdale's when it opens next year, instead of taking the Macy's name.
"We've studied the market there and we think this would be a good opportunity for Bloomingdale's," which is more upscale, more contemporary, and more designer driven than Hecht's or Macy's, Sanger said. "And by making the announcement now, we can have more input into the interior design of the store and we can make it truly a Bloomingdale's."
That decision should come as no surprise, said Gregory H. Leisch, chief executive of research firm Delta Associates. The Chevy Chase area is a magnet for high-end retailers because the median household income is $102,131 a year, compared with the area's median of $69,515, Leisch said.
Meanwhile, across the street from the soon-to-be Bloomingdale's, Chevy Chase Land Co. has signed six luxury retailers -- including Tiffany & Co., Cartier, Christian Dior, and Louis Vuitton -- for a new $165 million office and retail complex.
"I think it was pretty easy for Federated to make that decision," Leisch said. "I can't imagine that it took a lot of analysis on their part to put a Bloomingdale's there."
Federated stock closed yesterday at $64.76 a share, down 94 cents.