Federated May Fire 3,300 From Fingerhut

Federated Department Stores Inc., the owner of Macy’s and Bloomingdale’s, will fire 3,300 workers at its unprofitable Fingerhut catalog and Internet unit by the end of next week if a buyer for the business isn’t found.

Efforts to sell the unit to turnaround firm Business Development Group Acquisitions Inc. are continuing, and Federated is considering selling individual Fingerhut assets, Federated spokeswoman Carol Sanger said.

Federated is selling Fingerhut, an Internet and catalog retailer that serves mostly lower- and middle-income customers, to focus on its department stores, which attract higher-income shoppers, investors have said. Business Development Group is seeking financing, Sanger said. Fingerhut’s remaining 2,700 workers will be let go if other buyers aren’t found.

“While we still hope to be able to conclude this transaction, we understand Federated’s need to explore alternative sale scenarios for the Fingerhut assets,” said Peter Lytle, head of Business Development Group.

Lytle’s company said it has several letters of intent for funding that require more due diligence and he hopes to reach a definitive agreement with Federated.

The shares of Cincinnati-based Federated fell 14 cents to $40.85 on the New York Stock Exchange. The announcement was made after the close of regular U.S. markets.

Federated said it will provide severance packages to the workers based on years of service and other factors. About 3,000 of the affected employees are in Minnesota, while 250 to 300 are in Tennessee.

The retailer has been approached by other potential buyers of Fingerhut units, including its Arizona Mail Order, Figi’s and Popular Club catalogs, she said.

The Business Development Group, based in Wayzata, Minn., said it would rehire many of the fired workers if it completes a deal.

Federated bought Fingerhut in 1999 for $1.7 billion to expand its Internet business.