Feb 21, 2006 9:29 am US/Pacific
Federated Department Stores 4Q Earnings Up
CINCINNATI (AP) ―
Federated Department Stores Inc. said Tuesday its fourth-quarter income rose 59 percent, aided by the acquisition of former rival May Department Stores Co. The department-store giant also backed its full-year financial forecast.
For the quarter ended Jan. 28, the parent of Macy's and Bloomingdale's reported net income of $699 million, compared with $440 million a year ago. Per-share earnings fell to $2.52 from $2.55, reflecting a hefty increase in the company's share count.
Stripping out costs related to the May acquisition totaling $82 million, or 29 cents per share, Federated reported earnings from continuing operations of $2.74 per share. Revenue totaled $9.57 billion, up from $5.12 billion a year ago.
Wall Street had forecast a profit of $2.62 per share, the average estimate of 11 analysts surveyed by Thomson Financial, on projected sales of $9.42 billion.
Sales at stores open at least one year — a key indicator of a retailer's strength — rose 1.1 percent.
Shares of Federated fell 40 cents to $72.23 on the New York Stock Exchange in late morning trading Tuesday. Federated shares have traded between $54.90 and $78.05 the past year.
Federated Chairman Terry Lundgren said in a statement Tuesday that the quarter included stronger-than-expected performance in both the Federated and former May company divisions, as well as a benefit from a tax settlement and related adjustments.
Lundgren reiterated that 2006 will be a transition year with sales and earnings difficult to predict.
"We've got systems integrations, we're changing the names of our stores across America, we're adding 400 new Macy's stores across the United States," Lundgren, also president and chief executive officer, said in an interview Tuesday morning on CNBC. "This is a major, major change for our company and we're going to go through those integration costs in 2006."
For 2006, Federated projected earnings from continuing operations of $3.45 to $3.70 per share, excluding May acquisition costs and the sale of an operation. Same-store sales are expected to increase from 2 percent to 3 percent in 2006, and decline between half a percent to 1.5 percent in the current first quarter.
Analysts are forecasting annual earnings of $3.93 per share.
Lundgren also announced the appointment of Anne McDonald as the new chief marketing officer.
Federated, with corporate offices in Cincinnati and New York, operates more than 850 department stores and more than 720 bridal and formal-wear stores in 49 states, the District of Columbia, Guam and Puerto Rico. Federated stores include Macy's, Blomingdale's, Famous-Barr, Filene's and Kaufmann's among others. The company also operates macy's.com and Bloomingdale's By Mail.
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