Federated Department Stores

will restructure its

Fingerhut

catalog operations, following a previous disclosure of credit problems at the division.

Federated expects to eliminate 550 positions at the Fingerhut unit, some at the end of this month, and the rest in January. The job cuts will represent about 24% of the 2,300 positions located primarily at Fingerhut's Minnetonka, Minn., Plymouth, Minn., and Edina, Minn., operations. The restructuring will save about $40 million in overhead expenses starting next year. Federated expects to take a charge of $75 million to $100 million in the third and fourth fiscal quarters.

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In

July, the company said credit delinquencies at the unit, which it bought last year to ramp up its

Internet operations, were rising.

About 350 workers will be laid off. The remainder of the job cuts are open positions that won't be filled.

Additionally, the company will take a noncash write-down of goodwill and other assets of about $680 million in the third quarter ending Oct. 28. Excluding the restructuring charges, Federated expects operating losses of $20 million to $70 million in the direct-to-customer segment for the fall season.

For 2001, Federated expects earnings of $4 to $4.25 a share.