A Federated Foul Up?

Its acquisition of Fingerhut is running into serious problems

When Federated Department Stores Inc. announced its $1.7 billion acquisition of catalog retailer Fingerhut Corp. 17 months ago, it extolled the access the deal would give it to the Internet. Fingerhut's vast order-fulfillment capability and marketing prowess were just what Federated needed to ramp up its Bloomingdale's and Macy's e-commerce sites. Federated also saw a chance to provide fulfillment services to other online ventures. What Federated didn't mention, however, was that most of Fingerhut's business had nothing to do with the Net. The low-end catalog specialist was as far from Federated's business as a bargain-basement outfit is from a Fifth Avenue boutique.

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