Federated, Allied Stores Lose $2 Billion
Campeau Corp.’s Federated Department Stores and Allied Stores divisions posted losses of more than $2.1 billion in their fourth fiscal quarters, largely because of a writedown stemming from their bankruptcy reorganization.
But the companies, which own nearly 260 U.S. department stores such as Bloomingdale’s, Rich’s and Lazarus, also reported that they posted operating profits for both the fourth quarter and full fiscal year ended Feb. 3.
“I believe we have turned the corner on stabilizing the business and that we are well into a period of operational recovery,” Allen Questrom, chairman of the two divisions, said in a prepared statement.
Separately, troubled Toronto-based Campeau said it had proposed a business plan to its bondholders that includes the sale of real estate assets and a temporary halt in its interest payments.
Campeau said it would ask holders of $184 million in bonds to waive any defaults and defer interest payments through Dec. 31, 1991. In return, the company would sell assets from its real estate holdings to reduce its debt. Campeau’s real estate consists primarily of shopping malls, office complexes and businesses in the United States and Canada.
Federated and Allied, together the nation’s second-largest department store organization, have no stores in Southern California. They sought federal bankruptcy court protection from creditors on Jan. 15, citing the burden of $7.7 billion in debt. Much of the debt was incurred when Campeau acquired Federated in 1988 and Allied in 1986.
Federated lost $1.34 billion in the fourth quarter on sales of $1.59 billion, contrasted with a profit of $27.6 million and sales of $1.49 billion a year earlier.
The results were affected by a $1.15-billion writedown of goodwill--the amount over Federated’s book value that Campeau paid to acquire the company--an accounting move to reflect the deterioration of Federated’s financial situation.
The company had operating income of $48.6 million, down from $175.9 million.
Allied lost $836.8 million on sales of $892.2 million in the quarter, contrasted with a profit of $37.6 million on sales of $869.8 million.
Allied’s earnings were reduced by, among other things, non-operating charges of $660.3 million for its equity in Federated. Its operating income was $25.2 million in the quarter, down from $86.2 million a year earlier.
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