Federated Sees Steep Drop in Holiday Sales
Company officials said the downsizing of Fingerhut's core catalog is primarily responsible for the drop.
Sales for Federated's direct-to-customer segment were $287 million compared with $391 million the previous year. The results are based on a five-week compilation that ended Dec. 30.
Fingerhut's e-commerce operations saw a 40 percent increase. Carol Sanger, vice president of Federated's corporate communications in Cincinnati, said the company was pleased with Fingerhut's online performance, which exceeded the retailer's expectations. She would not reveal what company officials had expected or the amount of money generated by online sales.
News of the holiday sales loss followed a less-than-stellar year for Fingerhut. In October, Federated announced it would downsize the catalog and shift more attention to fingerhut.com. The news came after months of mounting losses due primarily to credit delinquencies. That same month, Federated also put $2.4 billion of Fingerhut's delinquent accounts up for auction. The sell-off was part of the company's plan to recoup some of its losses.
Federated bought Fingerhut, Minnetonka, MN, in March 1999 for $1.5 billion with hopes of enhancing its direct-to-customer sales business. Federated also assumed $200 million in the cataloger's debt, bringing the final cost to $1.7 billion.