Federated Completes Partial Credit Card Portfolio Sale to Citigroup

Federated Department Stores, Inc. today announced it has completed the first of two transactions in its planned sale of May Company credit card receivables to Citigroup. The previously announced transaction completed today includes that portion of the May Company portfolio – about 40 percent of the total – for which systems have been converted.

Today’s sale yielded total pre-tax proceeds of $803 million ($753 million after tax), as well as a gain of approximately $13 million ($8 million after tax, or approximately 1 cent per diluted post-split share). The gain on sales of credit card receivables continues to be excluded from Federated’s earnings per share guidance.

The second transaction, planned for late July or August after the requisite systems conversions, will cover the remainder of the portfolio, with pre-tax proceeds estimated at $1.075 billion to $1.125 billion. At that time, Federated will have completed the sale of all Federated and May Company customer credit receivables, which in total will have produced after-tax proceeds of approximately $4.6 billion.

Federated’s Financial, Administrative and Credit Services (FACS) division, headquartered in suburban Cincinnati, will continue to manage key customer service functions, and no job losses are expected as a result of the transactions. No changes are planned to Federated’s loyalty reward programs, and customers should continue to use their cards in the same manner as they do today.

Federated, with corporate offices in Cincinnati and New York, is one of the nation’s premier retailers, with fiscal 2006 sales expected to be more than $27 billion. Federated operates more than 850 department stores in 45 states, the District of Columbia, Guam and Puerto Rico under the names of Macy’s, Bloomingdale’s, Famous-Barr, Filene’s, Foley’s, Hecht’s, Kaufmann’s, L.S. Ayres, Marshall Field’s, Meier & Frank, Robinsons-May, Strawbridge’s and The Jones Store. The company also operates macys.com and Bloomingdale’s By Mail.