Federated to shut Fingerhut
Home & Textiles Today Staff -- Home Textiles Today, January 17, 2002
Cincinnati — After assessing the long-term possibilities, Federated Department Stores has decided to dispose of Fingerhut, the catalog division it bought in March 1999.
"We have determined that there is no longer strategic value to Federated in retaining Fingerhut's operations, and we have no expectation that these businesses would contribute meaningfully to the company's financial performance," said James Zimmerman, chairman and ceo.
"We took 2001 to stabilize the core catalog and determine its long-term fit with Federated and its normalized rate of profitability," said Karen Hoguet, cfo, in a conference call. But while Fingerhut is still on track with an annual EBIT of $75 million to $125 million for 2001, "it was increasingly clear that Fingerhut will not fit in with Federated, nor have a meaningful positive financial contribution in the future." She added that Fingerhut would generate a negative cash flow each year over the next few years, while ceasing Fingerhut's operations would free up more cash for Federated.