Federated, Allied present plan for reviving Campeau chains

October 04, 1990|By Knight-Ridder News Service

The parent companies of Bloomingdale's, which has a store in White Flint Mall in Kensington, Md., and several other well-known department stores unveiled a sweeping plan yesterday, saying they will jettison the protection of the Bankruptcy Court next year.

"It's not a plan that gets us to the moon. It's one that's realistic," said Allen Questrom, chief executive of Federated Department Stores Inc. and Allied Stores Corp., at a news conference in Manhattan.

The plan, presented to about 300 key creditors, predicts a 37 percent increase in annual sales -- to nearly $10 billion -- through 1996.

Though the plan does not address the potential for net profits, it estimates that annual operating profits will more than double in the next six years. Operating profits, or cash flow, do not include the payment of interest, taxes, depreciation and amortization.

Some analysts criticized the plan, calling it too optimistic in light of the recent lackluster performance of Federated and Allied and the nation's deteriorating economy.

"Without question, this should go right on the fiction list," said Alan Millstein, publisher of The Fashion Network Report, an industry newsletter.

In 1986, Canadian developer Robert Campeau bought Allied for $3.6 billion, and two years later gobbled up Federated for $6.6 billion. When he couldn't keep up with interest payments, his Campeau Corp. sought bankruptcy protection in January.

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