Federated Reports Drop in Earnings

Federated Department Stores (Cincinnati) announced that earnings fell 3.1 percent in the fiscal fourth quarter ending Feb. 3, 2001. However, department store sales jumped 6.6 percent in the quarter (though same-store sales rose only 1.6 percent). For the year, retail sales increased 3.9 percent and same-store sales increased 2 percent.

The financial report blamed the downsizing of the company's Fingerhut catalog and e-commerce operation, caused in part by credit problems, and the closing of – and restructuring costs associated with – its Stern's division. The company took pre- tax charges of $42 million for the reorganization of its catalog and online business, $71 million to write down Internet-related investments and $54 million to close Stern's. Also, falling orders at the Bloomingdale's by Mail catalog operation led to a $6 million loss for the Internet and catalog division, much of that the result of liquidating inventory.

“This has been a disappointing year overall,” conceded chairman and ceo James Zimmerman. “However, our department stores performed well despite a difficult economic climate, and we generally are pleased with the results from that segment of our business.” In fact, increased sales of the stores'private labels helped the department store division increase earnings by 7.7 percent in the face of retail's worst holiday season since 1995.