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Federated sells store unit
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May 13, 1998: 12:08 p.m. ET
Managers buy specialty chain for $185M; First-quarter net up 150 %
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NEW YORK (CNNfn) - Federated Department Stores Inc., the big-league department store operator that has had its specialty retail division on the selling block since 1994, has ended its search for a buyer.
As it turns out, the company didn't have to look far.
The Cincinnati-based owner of Macy's, Bloomingdale's and Burdines said Wednesday it signed a letter of intent to sell its specialty store division to a management group led by Julian R. Geiger, president of the division, for $185 million.
Terms of the deal weren't disclosed.
Carol Sanger, Federated's vice president of corporate affairs, said the specialty stores didn't fit into the company's strategy to expand its department stores.
"We announced several years ago our intent to sell the division," she said. "We acquired the division through our acquisition of Macy's in 1994, but specialty stores really didn't fit."
The buyout offer from management, she said, was the best one the company received.
Headquartered in New York, the division encompasses 163 Aeropostale and Charter Club stores in 22 states and the District of Columbia.
Federated had annual sales last year of more than $15.6 billion. The company operates more than 400 department stores in 36 states, including The Bon Marche, Goldsmith's, Lazarus and Rich's and Stern's stores.
Separately, Federated reported a 150 percent jump in first-quarter profits. Earnings rose to $60 million, or 27 cents per diluted share, from $24 million, or 11 cents per share, a year earlier.
"We are pleased with the strength of the company's first-quarter performance, although results for the first quarter are not terribly significant in the context of the total retail year," Federated Chairman and Chief Executive James M. Zimmerman said. "We also believe that the strong improvement in earnings in the quarter, while encouraging, reflects a higher rate of increase than will be seen for the balance of the year."
Federated's stock was trading on the New York Stock Exchange at 52-5/16, down 5/8, at mid-morning Wednesday following the news. 
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