One On One With Martha Stewart & Federated Dept. Stores CEO, Terry Lundgren
Thursday, April 06, 2006
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SUSIE GHARIB: Federated Department stores announced today that Martha Stewart will design an exclusive line of home furnishings for its Macy`s stores. The new "Martha Stewart collection" which will include everything from bedding to dinnerware, will debut in the fall of next year. Earlier today I sat down with Martha Stewart and Federated`s CEO Terry Lundgren. I began by asking Stewart why the deal is important for her company.
MARTHA STEWART, FOUNDER, MARTHA STEWART LIVING OMNIMEDIA: It has always been our intention to move up the retail pyramid with our merchandise. With our signature furniture, we are already in furniture stores across the country. Now we will be able to, with a vast array of wonderful merchandise for the home, be at the department store level. This is what is very exciting.
GHARIB: Terry, Martha Stewart sells furnishings to Kmart. So why would you want to carry merchandise that is sold by a discounter?
TERRY LUNDGREN, CHMN. & CEO, FEDERATED DEPT. STORES: Well, it is going to be a totally different product, Susie. This is all going to be designed with Martha and with our collaboration focused on the Macy`s consumer. So this is going to a whole new level, whole new level of product, a whole new level of a different assortment. And this is never been possible for us before to satisfy the demand of the Martha Stewart product.
GHARIB: Martha, how are you going to differentiate the products that you`re selling at Macy`s versus Kmart?
STEWART: By manufacturing techniques, by design, by assortment and also by price. The Macy`s product will be a little bit more expensive than the Kmart product, but it will also have much added value.
GHARIB: Terry, Federated really has never done that well with the whole home goods area. Is the Martha Stewart name the answer or do you have other ways for making this work?
LUNDGREN: It is a $4 billion business today. It is just not growing. The reason is pretty simple to me and that is, there is nothing really unique about the product out there. It is very widely available. This is going to be different. We`re going to now have a very big product lifestyle group of categories throughout the home store with Martha`s brand expertise. I mean she`s got credibility in the field of home furnishings. For the first time, we`re going to have a very big and important launch here for home.
GHARIB: Can you at all quantify for us how much of a draw will these new products be for the shoppers?
STEWART: We do know that 75 million women are interested in buying Martha Stewart products. We know that 50 million women have already purchased Martha Stewart products. That`s a lot of man power - women power out there. And in many of our surveys, people have said we like to shop at Macy`s. So we would like to be there. We want to be where the shopper wants us and needs us.
GHARIB: So where are all these Martha Stewart products going to be replacing in the Macy`s collection?
LUNDGREN: Well, in some cases they`re going to actually be replacing our own products, the seller products that we have on the floor today. But what I`m looking forward to and I think we`re going to have new products. I think we`re going to have products that Martha would think about that we don`t naturally carry in our stores. We have had a few dinners and conversations over the last couple of months, talking about this and I don`t even know where it ends. I`m not going to put any limitations on it.
GHARIB: Martha, you`ve been doing a deal a minute in television, in publishing, now in home furnishings. Is there a danger that as you launch more and more businesses using your name, that you`re spreading your brand too thin?
STEWART: I don`t really think so. I think that we would have already been here if I hadn`t had my two-year problem. Now that that is primarily over, we are just picking up where we left off and proceeding as a growth company in a very exciting field of the home.
GHARIB: Speaking of growth, you`ve been going through your own growing pains. You`ve bought May department stores. You`re selling Lord & Taylor. Where do you see growth coming from?
LUNDGREN: Well, my vision is to have Macy`s as America`s department store, be the only national brand. We`ve never been able to advertise on our Macy`s Thanksgiving Day parade before because we weren`t a national company and now we are. We`re thinking outside of the box. We`re trying to think of a brand new ways of connecting with the consumer and so I feel really good about this reinvention of the department store and Martha is going to be a big part of that.
GHARIB: Let`s talk a little bit about both of your company stocks. A great day for Martha Stewart Living Omnimedia today. What more do you think you need to do to get the stock back up to the $30 level it was a while ago?
STEWART: Well, we certainly want to create shareholder value and making a partnership like this with Macy`s is just part of the program for doing that. Then we will have the products in the stores. We will prove that they will sell very, very well and we will help not only our stock and our shareholders, but also the shareholders of Macy`s.
GHARIB: Terry?
LUNDGREN: As you probably know, our stock has tripled in the past two- and-a-half years. So I think our shareholders are saying today, thank you, keep on performing the way you`ve been performing and delivering, both the earnings results as well as the vision for the future and we`ll keep delivering the great growth we`ve had in our stock.
GHARIB: Well, congratulations to both of you, your big announcement. Thank you so much, Martha Stewart and Terry Lundgren.
STEWART: Thank you very much.
