Federated Department Stores, now known as Macy’s Inc., acquired Hermes Department Stores Inc. in 1988. This acquisition was a significant milestone in the retail industry, as it allowed Federated to expand its reach and become one of the largest department store chains in the United States.
Background
Hermes Department Stores Inc. was founded in 1907 by Emanuel Hermes and his brother Louis in Los Angeles, California. The store quickly became a popular shopping destination for locals, offering a wide range of merchandise from clothing to home goods.
Federated Department Stores, on the other hand, was established in 1929 by a group of department store owners looking to consolidate their businesses. The company grew rapidly over the years through mergers and acquisitions, eventually becoming one of the largest retailers in the country.
The Acquisition
In 1988, Federated Department Stores acquired Hermes Department Stores Inc. for $1 billion. The acquisition allowed Federated to expand its presence on the West Coast, where Hermes had a strong presence.
Following the acquisition, Federated rebranded all Hermes stores under its own nameplate and began implementing changes to improve operations and increase profitability. This included revamping store layouts and merchandising strategies to better appeal to customers.
Impact on Retail Industry
The acquisition of Hermes by Federated was significant not only for the two companies involved but also for the retail industry as a whole. At the time of the acquisition, department stores were facing increasing competition from discount retailers like Walmart and Target.
By acquiring Hermes and expanding its reach on the West Coast, Federated was able to better compete with these discount retailers by offering a wider range of products at competitive prices.
The acquisition also signaled a trend towards consolidation in the retail industry, with larger companies seeking to acquire smaller competitors to gain market share and increase profitability.
Conclusion
The acquisition of Hermes Department Stores Inc. by Federated Department Stores in 1988 was a significant event in the retail industry. It allowed Federated to expand its reach on the West Coast and better compete with discount retailers like Walmart and Target.
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