Federated reports earnings gain
CINCINNATI (AP) – The retailing giant Federated Department Stores Inc. reported a 10 percent increase in third-quarter earnings, beating Wall Street expectations as strong October sales offset a slow start to the quarter and lost business from the Florida hurricanes in August and September. The operator of Macy’s, Bloomingdale’s and Lazarus-Macy’s department stores said Wednesday it earned $74 million, or 42 cents a share, in the quarter ended Oct. 30, compared with $67 million, or 36 cents a share, in the third quarter of 2003.
Analysts surveyed by Thomson First Call had predicted earnings of 39 cents per share.
The results included store closings, centralization and consolidation costs of $36 million in the third quarter, compared with $29 million for the year-ago period.
Sales were relatively unchanged, increasing less than 0.2 percent from a year ago to $3.49 billion.
The strongest sales performance was at the Bloomingdale’s, Burdines-Macy’s and Macy’s West stores, chief financial officer Karen Hoguet said during a conference call with analysts.
Handbags, jewelry, cosmetics and children’s clothing sold well, and the company saw increases in men’s and women’s apparel, she said.
The company had a bump in sales in October in Florida after the hurricanes but it was not enough to offset the losses at stores in the state caused by the storms, Hoguet said.
Sales at stores open at least a year, known as same-store sales, increased 0.4 percent. Same-store sales are considered the best indicator of a retailer’s health.
For the first nine months of the year, Federated earned $249 million, or $1.38 per share, up from earnings of $233 million, or $1.25 per share in the year-ago period.
Sales increased 3.4 percent to $10.6 billion from $10.21 billion a year ago.
The company also spent $336 million to repurchase 7.4 million shares of stock in the third quarter.
Federated maintained that it will earn between $2.45 to $2.55 per share in the fourth quarter. The company anticipates same-store sales for the fourth quarter to increase 1.5 percent to 3 percent. Federated expects November same-store sales will be up no more than 2 percent, while December will benefit from having two extra pre-Christmas shopping days this year, resulting in a projected same-store sales increase of 1 to 3 percent.
Federated had 2003 fiscal year sales of more than $15.2 billion. It has more than 450 stores in 34 states and operates macys.com and Bloomingdale’s By Mail.
Its shares were up 17 cents at $53.97 a share in afternoon trading Wednesday on the New York Stock Exchange. Federated’s share price has ranged from $42.54 to $55.06 over the past year.
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On the Net:
Federated Department Stores: http://www.fds.com
AP-ES-11-10-04 1258EST