USA: FDS Acts On Troubled Fingerhut Credit Performance
Federated Department Stores, Inc today quantified the impact of the credit delinquency problem at its Fingerhut subsidiary. The company said the impact on second quarter EBIT (earnings before interest and taxes) in its direct-to-customer business segment is expected to
James M Zimmerman, Federated’s
chairman and chief executive officer, said the company is taking steps
to address Fingerhut’s credit delinquency situation, but anticipates that
it will take time to rectify the problem.
In the interim, increased reserves for bad debt will be required and, combined
with anticipated lower catalog sales due to a tightening of credit, there is
a potential for lowering EBIT in the direct-to-customer segment by an additional
$200-250 million in the Fall season, Zimmerman said. He added that 2001 is expected
to show significant improvement.
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