Gail Woods Auditing Research Paper #1 Federated Department Stores, Inc.

is known as a giant in the department store industry that started over 75 years ago. The corporation was created from established pioneers in the retail industry who already had obtained an individual prominent presence Abraham & Straus, Filenes, F&R Lazarus & Co., and Bloomingdales. Today Federated has continued its crusade to unite the US department store industry through its most recent acquisition of May Department Stores, formerly Marshall Fields, one of its main rivals. On November 25, 1929 in the state of Ohio, Federated became incorporated publicly trading its stock, FD, on the New York Stock Exchange. Federated currently operates 850-plus stores nationwide and have annual sales in the arena of $27 billion. Their department stores are operated in seven regional divisions that cover the east, Midwest, north, northwest, south, west and the Florida area. The Board of Directors consists of 10 individuals (7 men and 3 women) with only 1 member, Terry Lundgren, who actually holds a position within the company. With a count of an estimated 112,000 employees, Federated is known as one of the largest retail stores in the states. KPMG, LLC is the independent accounting firm that audits Federated Department Stores financial statements and is known as one of the Big Four accounting firms in the United States. Merchandise inventory consists of men, women and children apparel, dinnerware, fragrances/cosmetics, jewelry and even some pet accessories. This large variety of

merchandise also includes private label brands geared towards professional men and women. Ninety percent of the companys revenue comes from the Macys operation while Bloomingdales makes up the remaining business. The former May Company locations were used to introduce Macys private brand and offer more exclusive and distinguished merchandise from market vendors. Federated has plans to improve their stores so that they offer both a better shopping experience for its customers and enhance their financial results for shareholders. Between the time periods of 2006 2008 as much as $4 billion will be spent on new stores, current store improvements, and reinventing systems and e-commerce infrastructure with a capital budget of $1.6 billion in 2006 alone. In its desire to claim the upper income pocket, Federated may loose some of its more moderate customers to its competitors. Standard & Poors Industry Survey states, Nordstrom dominates the better sector, but Macys could match Nordstrom in terms of merchandise mix. Their outlook is that the May Department Stores will move from the moderate department store sector (JC Penney and Kohls) to the upper-market arena where, Nordstrom is the clear leader. This means that Federated will be greatly challenged in meeting the expectations of a new market in their acquired store and getting the stamp of Macys to either take root or risk losing the moderate sector. I would enjoy working for this firm because they have a solid vision and their customer first attitude shows that they are asking the right questions and providing the right answers.

References Federated Department Stores. Retrieved January 16, 2007 from http://www.federatedfds.com Biesada, Alex (2007). Hoovers Inc. a D&B Company. Retrieved January 16, 2007 from http://www.hoovers.com Standard & Poors Industry Surveys. Retrieved March 5, 2007 from http://www.standardandpoors.com, Vol. 174, No. 46, Section 2