NEW YORK -- Federated Department Stores Inc. and Allied Stores Corp. unveiled an ambitious plan yesterday to improve profitability that assumes Campeau Corp.'s U.S. retailers will emerge from bankruptcy next year.
The business plan for the years through 1996 includes selected store closings, but no outright sales of entire department store chains.
Allen I. Questrom, chairman and chief executive of the sister retailing operations, said the plan is the foundation for building a proposal to get out of bankruptcy proceedings.
"We think we can emerge in 1991," he said at a news conference. He would not say how much money would be offered to creditors, who collectively are owed about $7.7 billion. Most of the debt was amassed when Canada's Campeau bought Allied and Federated with borrowed money in the 1980s.
The judge supervising the bankruptcy in a Cincinnati court last month gave Federated Stores Inc., the holding company for Allied and Federated, until Feb. 28 to submit its reorganization plan. Federated has been granted two extensions.
The executives said the reorganization plan, which must be approved by creditors and U.S. Bankruptcy Judge J. Vincent Aug Jr., would not propose chopping off any Allied or Federated divisions. Among the chains they run are such well-known retailers as Bloomingdale's, Bon Marche, Burdines, Jordan Marsh and Rich's.
The plan presented yesterday projects that operating earnings of Allied and Federated will more than double over the next six years.