• by Sarah Mahoney  @mahoney_sarah, November 9, 2006

Federated Department Stores said yesterday that sales at the "new" Macy's stores--the 400-plus stores that went by such regional names as Filene's, Foley's and Marshall Field's--didn't quite live up to expectations, despite heavy marketing support since the September switch.

Sales were close to targets in most categories, the company said in a conference call Wednesday--with the exception of home products, "which were off by a lot."

Federated is hardly alone in its struggle to attract shoppers to its home goods, which account for about 15 percent of sales and include furniture, kitchenware, luggage, and bed and bath linens. A study from Research and Markets last May reported that total retail sales in traditional department stores dropped 13 percent in the last five years, from $96.3 billion in 2000 to $84.1 billion in 2005.

At the low end, shoppers have been wooed by the sexy home collections of companies like Target. And at the high end, there's a fast-growing galaxy of specialty retailers, offering an entirely different environment for high-thread-count sheets and designer leather couches.

In addition to adjusting merchandise and tweaking square-footage allocations, Federated is also looking forward to salvation in the form of Martha Stewart. Its Martha Stewart products, announced last spring, will be available in Federated Stores next year.

Sales in existing Macy's stores, meanwhile, performed better than expected. And for the fourth quarter, it expects sales of $9.1 billion to $9.4 billion. The company said advertising and marketing efforts would continue to be strong in the fourth quarter, and that consumers were reacting positively to ads that were less linked to specific price cuts.