Federated Departments Stores Inc. reported a fourth-quarter net loss of $477 million, compared with net income of $332 million for the same period last year. The quarter ended Feb. 2.
In addition, the fiscal 2001 net loss increased to $276 million from $184 million for fiscal 2000. The company used approximately $300 million of excess cash to repurchase 7.4 million shares of Federated common stock in 2001.
Federated reported a charge of $770 million partly attributable to the disposal of its Fingerhut catalog subsidiary. The loss is being reported in Federated’s financials “based on an assumption that the Fingerhut catalog operation will be closed,” according to a statement. If a sale is completed, these estimates would be updated to reflect the terms of the deal, the statement said.
Federated announced on Jan. 16 that it would sell or liquidate its Fingerhut catalog subsidiary in fiscal 2002. Since then, Federated has signed a letter of intent with a possible buyer, Peter Lytle of the Business Development Group.
The $770 million reflects an after-tax loss for the fourth quarter, and includes $292 million of estimated after-tax operating losses expected during the wind-down period. The company expects to generate approximately $1.1 to $1.3 billion of after-tax proceeds over the next four years as a result of the “disposition” of Fingerhut.
In the fourth quarter, Fingerhut produced sales of $434 million and EBITA (earnings before corporate expenses, interest and taxes) of $49 million.
For the fiscal year, Fingerhut’s sales totaled $1.2 billion and its EBITA totaled $103 million, which was within the expected range of $75 million to $125 million.
“This was a difficult year for us as a company, as well as for our industry and our nation,” said James M. Zimmerman, Federated’s chairman and CEO, in a statement. “Our company is making the most of every opportunity in a recessionary economy, so that the company is positioned to drive sales and earnings growth in the year ahead.”
In its other direct marketing areas, Federated had restructuring charges of $44 million related to the reorganization of macys.com, bloomingdales.com and Bloomingdale’s By Mail in the fourth quarter.
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