6,000 to Lose Jobs; Warns It Will Not Meet Profit Expectations

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CHICAGO (AdAge.com) -- Federated Department Stores announced after close of market Wednesday that it will shut down Fingerhut, its catalog and e-commerce subsidiary.

Cincinnati-based Federated, which operates 450 stores including Bloomingdales and Macy's, acquired Fingerhut for $1.7 billion in March 1999 in an effort to ramp up its e-commerce offerings, but the unit suffered losses in 2000 and 2001.

"We have determined that there no longer is strategic value to Federated in retaining Fingerhut's operations, and we have no expectation that these businesses would contribute meaningfully to the company's future financial performance," Federated Chairman-CEO James Zimmerman said in a statement.

Federated does not expect to find a buyer for the money-losing business.

6,000 to lose jobs
Fingerhut's 6,000 employees -- 4,700 in Minnesota and 1,300 in telemarketing and distribution centers in Tennessee -- will lose their jobs.

Federated, which expects the dissolution of Fingerhut to generate more than $1 billion over the next four years, does plan to sell its Arizona Mail Order subsidiary, which operates catalogs including Old Pueblo Traders and Bedford Fair.

Federated, which also warned that it would not meet profit expectations for its fiscal fourth-quarter ending Jan. 31, anticipates a modest same-store sales increase of 1% to 1.5% in 2002.

For the three quarters ended Nov. 3, Federated reported net income of $171 million on $10.5 billion in sales.

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