Federated Department Stores (Cincinnati) announced a 35 percent decrease in income for its first quarter 2001. Comp-store sales were down 1.5 percent for the quarter and overall store sales were down 5.2 percent from the same period a year ago. Income from department stores fell 12 percent in the period.
While the company placed a lot of the blame for the performance on a flattening economy, there were a number of other issues plaguing the 400-store operator – the costs of closing its Stern's division, the continued drag on profits from its Fingerhut catalog and Internet division, the California energy situation and the tighter margins produced by offering so much discounted merchandise.
When the costs of closing its New Jersey-based Stern's department store unit were excluded from the results, Federated's earnings beat the estimates of most Wall Street analysts. And while department store sales were disappointing, revenues for the Internet-based Fingerhut unit were crushing, tumbling 42 percent from the first quarter of 2000. Chairman and ceo James Zimmerman also noted that the electricity shortages and higher energy costs in California hurt the performance of the 97 Federated stores there. One of Federated's larger divisions is its Macy's West unit based in San Francisco (comprised of roughly 79 California stores), and it has five Bloomingdale's stores in the state – two in Los Angeles and one each in Newport Beach, Palo Alto and Sherman Oaks — the result of expansion during the 1990s.
The company operates 440 stores in 33 states and Puerto Rico under the names Bloomingdale's, The Bon Marche, Burdines, Goldsmith's, Lazarus, Macy's and Rich's.