Meanwhile, the company is divesting 80 department stores in malls where this is duplication with other brands. So far Federated has sold 46 and is close to divesting another 18, with proceeds to total $400 million to $500 million.

Federated, which operates 850 department-store units, is converting the regional brands it acquired from May, totaling about 400 stores, into Macy's in September. Management says the conversion, which includes remodels and the replacement of signage, will cost around $400 million.

During the first quarter, which ended April 29, same-store sales were flat year over year, on $5.9 billion in revenue. The company's best-performing region was Macy's Florida, while the chain lagged in its Northern and Midwestern divisions. Due to integration costs with May and inventory adjustments, Federated's income was $20 million, compared to $252 million during the same year-ago period.

For the second quarter, management predicts revenue to come in between $6 billion and $6.25 billion, on a 3% to 5% same-store sales increase. Hoguet characterizes the company's performance as "so far so good with a lot of work remaining to be done."