Federated Reports Loss, May Cut Texas Operations

Citing the troubled Texas economy, Federated Group, a consumer electronics retailer based in City of Commerce, on Tuesday reported a loss for the third quarter and said it might scale back its Texas operations.

For the third quarter ended Nov. 30, Federated had a net loss of $575,000, compared to earnings of $2.8 million in the year-ago quarter. This was despite a 19% rise in third-quarter revenue to $106.5 million.

For the nine months, the company had net income of $808,000, compared to $8.3 million in the year-ago period. Revenue rose 22% to $293.6 million.

Hardest hit in Texas were the 10 stores in Houston, which has been hurt significantly by the downturn in the oil industry, spokesman Merrill Lyons said. Results there offset a “very, very good Christmas” season in California and Arizona, he added. As a result, the company said it is “reviewing its operations in Texas in order to implement profitable operations under the present adverse economic conditions.”

Lyons said Federated might consider closing some of its 24 Texas outlets but would first take other steps, such as reducing the size and cost of warehousing and inventories in the state. Of the 24 locations, 18 are superstores of 25,000 square feet, while the rest are smaller stores of 6,000 square feet.

“We will review the possibility of closing some of the smaller stores,” Lyons said, adding that the company has closed four such locations in the last two years and had intended all along eventually to operate only superstores in the Texas market.

The company operates 68 stores, including 43 in California and Arizona and one in Wichita, Kan.