Federated 4Q impacted by Fingerhut, Sterns
By Don Hogsett -- Home Textiles Today, 3/5/2001
CINCINNATI -Still grappling with problems in its troubled Fingerhut unit, and at the same time picking up the tab for shutting down its Stern's division, fourth-quarter profits at Federated Department Stores tumbled by 25.9 percent, to $332 million from $448 million last year.
Taking a bite out of the bottom line, the retailer recorded a $167 million pre-tax charge tied to the Stern shutdown and the ongoing overhaul and downsizing of the Fingerhut business
Sales in the crucial Christmas quarter inched up by 2.4 percent, to $6.1 billion from $6.0 billion last year, as gains in the core department store business more than offset a deep slide in the Fingerhut and Bloomingdale's By Mail units.
Department store sales advanced by 6.6 percent in the holiday season, to $5.5 billion from $5.2 billion last year. Same-store sales edged up by 1.6 percent. Operating profits before one-time items in the department store segment rose by 8.7 percent, to $939 million from $872 million last year.
But particularly hard hit was the direct-to-consumer segment, where sales fell off 25.9 percent, to $575 million from $775 million last year, stemming from the Fingerhut downsizing and "unexpectedly weak sales resulting in inventory liquidation at the Bloomingdale's By Mail catalog," according to the company. The direct-to-consumer business posted a $48 million operating loss, compared with a $55 million operating profit last year. Excluding one-time items, the division posted a smaller fourth-quarter loss of $6 million.
For all of last year, Federated posted a loss of $184 million, compared with a prior-year profit of $795 million, as it grappled with the problems at Fingerhut and Stern's. Sales moved up by 3.9 percent, to $18.4 billion from $17.7 billion the preceding year. For the 12-month period, department store sales moved up by 3.9 percent, to $16.5 billion from $15.9 billion. Same-store sales were up by 2.0 percent. Sales in the direct-to-consumer segment, whittled down by the Fingerhut downsizing, ticked up just 3.9 percent, to $1.9 billion.
Qtr. 2/3 (x000) | 2001 | 2000 | %CHG |
|---|---|---|---|
Sales | $6,115,000 | $5,973,000 | 2.4 |
Oper. income (EBIT) | 835,000 | 856,000 | -2.5 |
Net income | 332,000a | 448,000 | -25.9 |
Per share (diluted) | 1.65 | 2.04 | -19.1 |
Average gross margin | 41.4% | 41.5% | - |
SG & A expenses | 27.8% | 27.1% | - |
12 months | 2001 | 2000 | %CHG |
Sales | 18,407,000 | 17,716,000 | 3.9 |
Oper. income (EBIT) | 1,512,000b | 1,701,000b | -11.1 |
Net income | (184,000)c | 795,000 | - |
Per share (diluted) | (0.90) | 3.62 | - |
Average gross margin | 40.9% | 41.1%b | - |
SG & A expenses | 32.7% | 31.5% | - |
( ): Denotes loss
a-Fourth-quarter results were reduced by a $167 million pre-tax asset impairment and restructuring charge stemming from the shutdown of the Stern's department store division and the downsizing of the retailer's Fingerhut unit.
b-Operating profits and average gross margin exclude a $35 million inventory valuation adjustment related to the Fingerhut restructuring.
c-12-month loss includes the $35 million inventory valuation adjustment and a $927 million pre-tax asset impairment and restructuring charge.
