Struggling Fingerhut Hurts Federated Earnings
This loss comes as no surprise for Federated's management, which cautioned this summer that the struggling Fingerhut unit would cost millions and take months to turn around.
Carol Sanger, vice president for corporate communications, said yesterday that the worst was behind the retailer. However, Federated does expect to take some losses in the fourth quarter -- as much as $56 million in fourth-quarter non-cash charges.
Despite the end-of-year results, Federated expects positive results during the holiday season.
Federated sales for the third quarter totaled $4.19 billion, compared with $4.13 billion for the same period last year. For the first nine months, Federated posted a loss of $516 million, or $2.50 per share, compared with earnings of $347 million, or $1.58 per share, for the first nine months of 1999.
The retail giant also reported operating earnings of 26 cents per share for the third quarter, topping analysts' forecast of 20 cents per share, according to a survey by First Call/Thomson Financial. Calls made to Federated yesterday were not immediately returned.
Federated bought Fingerhut Cos. Inc., Minnetonka, MN, for 1.7 billion in March 1999 to boost the retailer's direct-to-customer sales business. Last month, Fingerhut placed $2.4 billion of delinquent accounts up for auction. The move came less than a month after the retail giant announced the downsizing of the struggling unit.
Federated operates more than 400 department stores in 33 states. The stores include Bloomingdale's, The Bon Marche, Burdines, Goldsmith's, Lazarus, Macy's, Rich's and Stern's.