NEW YORK -- Happy to bid adieu to 2001, Federated Department Stores Inc. posted steep fourth-quarter losses, although slightly lower than expected, and outlined steps to improve its customers' shopping experience...
NEW YORK -- Happy to bid adieu to 2001, Federated Department Stores Inc. posted steep fourth-quarter losses, although slightly lower than expected, and outlined steps to improve its customers' shopping experience in the future.
The Cincinnati-based department store giant, which saw last year's sales dip below $16 billion, also boosted its expectations for 2002. Wall Street returned the favor by trading its shares up $2.64, or 6.8 percent, to close at $41.66 on the New York Stock Exchange Tuesday.
Net losses for the quarter ended Feb. 2 totaled $447 million, or $2.23 a diluted share, compared with year-ago profits of $332 million, or $1.65.
Results were dragged down by a $770 million aftertax loss on disposal of the Fingerhut unit, $292 million of which are attributable to estimated operating losses during the wind-down period. While Federated, as reported, has signed a letter of intent to sell Fingerhut to Business Development Group Acquisitions Inc., it is recording the loss based on the assumption that the catalog operator will be closed instead. Estimates would be updated if the sale goes through. The $770 million figure is below the $800 million to $950 million previously forecast.
The quarter also carried with it a truckload of other restructuring charges related to the closure of Stern's, integration of Liberty House and the reorganization of the firm's direct business, aggregating to $95 million in pretax items. The prior year's quarter included $80 million in pretax charges.
Income from continuing operations before charges retreated 22.5 percent to $310 million, or $1.90 a diluted share, compared with $400 million, or $2.23, during the year-ago period, which included an extra week. By this measure, earnings per share beat Wall Street estimates of $1.86 a share by 4 cents.
Overall sales for the quarter descended 8.4 percent to $5.13 billion from $5.6 billion a year ago. Same-store sales at department stores were down 6 percent.
In a statement, chairman and chief executive James Zimmerman, cited cash flow -- which was up to more than $775 million for the year compared with $600 million last year -- as a point of strength. "By this standard, 2001 was a good year for Federated," he noted. "This is strategically important in maintaining maximum financial flexibility."
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