About 400 stores that Federated acquired from May DepartmentStores last year under the banners of Marshall Field's,Strawbridge's and others will be converted next month. "They aresaying that they are the first national department-store chain,which is kind of interesting, since we've been a nationaldepartment-store chain for 104 years," Ullman said during thecompany's second-quarter conference call.

While Macy's will have larger national footprint, J.C. Penney isalso experiencing growth. Executives plan to open 50 new stores peryear, most of them stand-alone units, from next year through 2009.Of the 28 new units scheduled to open this year, 25 are planned forthe third quarter alone. Capital expenditures for the year areprojected to be $800 million.

Ullman says the company is considering sites at 400 locations togrow its store base during this time period. About two-thirds ofthose sites are not part of mall developments he says, keeping withthe company's recent strategy of opening off-mall units. A majorityof its 1,021 current units are attached to malls.