(Catalog Age)–Nearly three years to the day after it bought Fingerhut as a means of getting into e-commerce, Federated Department Stores announced on yesterday that it will close down the low-end general merchandise catalog. The last Fingerhut catalog will mail at the end of this month, catalog operations will wind down throughout the year virtually all of Fingerhut’s 6,000 employees will be laid off.
Federated, which has been evaluating Fingerhut’s future for the past 18 months, still holds out a glimmer of hope that it might find a suitor for the downscale catalog business. But parent company concedes it’s unlikely that any buyer will step forward given both the state of the economy and Fingerhut’s credit delinquencies’ drain on Federated’s profitability. “Should a buyer emerge, we’ll be prepared. But that’s not something we think is likely,” said Federated spokesperson Carol Sanger.
Federated also plans to aggressively seek buyers for several catalogs that operated as Fingerhut subsidiaries, including Arizona Mail Order, Bedford Fair, Old Pueblo Traders, Lew Magram, Brownstone Studio, Figi’s, and Popular Club Plan. All seven titles will continue operating until they are sold.
The announcement comes on the heels of a disappointing holiday season in which Fingerhut’s sales plunged 20% in December to $209 million from $260 million in December 2000.
Many industry observers were surprised when Federated bought Fingerhut in February 1999, because of the odd match of Fingerhut’s lower-income target market and the upper-middle income audience of many of Federated’s retail properties, including Bloomingdale’s, Macy’s, and The Bon Marche. Still, some were stunned that even though Federated will generate $1.1 billion to $1.3 billion of after-tax cash proceeds (net of one-time costs) over the next four years from the disposition and monetization of Fingerhut’s assets, that it was unable to sell off any of Fingerhut’s assets, particularly its database.
“I’m surprised that Federated hasn’t tried to shop the business more
