After an annual meeting that offered no news Friday, Federated Department Stores chairman James Zimmerman made a stern declaration on the company's behalf:

        The department store isn't dead.

Zimmerman

        Dining with reporters in a 20th floor conference room at company headquarters in downtown Cincinnati, Mr. Zimmerman seized the opportunity to rebut published opinions that department stores are tired concepts dying a slow death.

        “Malls are not dead. Department stores are not dead,” he said. “All businesses have to contemporize themselves.

        “Just stand back and think about it for a minute,” he said. “There is one hell of a lot of product being bought between Nieman's and Kohl's. That's a very big chunk of merchandise. To think that that's going to evaporate or go away is just insane.”

        In recent years, Federated has come under attack from mail-order catalogs, e-tailers, specialty apparel chains and mass merchandisers. Federated is responding with jazzier store layouts and tighter inventory management. Its Easton store in Columbus serves as the prototype.

        “Federated's going to do fine,” Mr. Zimmerman said. “In all that (department store) business, who's going to do that business better than somebody who's got the nameplates Macy's, Bloomingdale's, Lazarus, Rich's, Burdines and Bon Marche? We're the envy of everybody, and we have absolutely the best people.”

        Mr. Zimmerman said investors mistakenly confuse Federated for high-tech stocks with 20 percent annual earnings growth. The real story, he said, is Federated's ability to generate cash, which has produced a war chest of about $1 billion for share buybacks and “strategic investments” he would not elaborate on.

        “We're not going to grow at 7 to 10 percent (same-store sales growth) like Kohl's,” he said. “It just isn't going to happen. By the way, they won't either when 80 percent of their stores are more than 5 years old like ours are.”

        Now that the recession and the consumer shock from the Sept. 11 attacks are subsiding, Mr. Zimmerman said Federated expects same-store sales growth of 3 percent and earnings per share growth of 13 to 15 percent.

        “Not too bad,” he said. “That's my argument. I just don't get all the doom and gloom.”

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