Merger Helps Federated Q3 Soar

The Cincinnati-based retail giant, which operates 459 stores under the Bloomingdale's and Macy's flag, reported net income of $455 million, or $1.78 per diluted share, on revenues of $5.8 billion for the 13 weeks ending Oct. 29. For the same period last year, the company had a net income of $74 million, or 42 cents per diluted share, on revenues of $3.5 billion. Net sales for the period also soared 64% to $5.79 billion from $3.53 billion for the third quarter of 2004.

Hoguet said Federated's third-quarter results, which included sales and earnings from the May Department Stores that were acquired in August, were slightly above expectations for the quarter. The results also include a $480 million pre-tax gain on the sale of receivables to Citigroup along with $53 million in integration costs associated with the May merger. Excluding those costs, earnings per share were 36 cents, the company said.

Same-store sales for the retailer were up slightly by 0.6%, due largely to store closings in the Southeast because of hurricanes Wilma, Katrina and Rita. The comparable sales figure was less than half the average quarterly increase for this year. The company said five Macy's stores in New Orleans and South Florida suffered extensive hurricane damage and will remain closed for the rest of the year.

For the fourth quarter, Federated said it expects comparable store sales to gain 1% to 2% by the end of the year and projected per share earnings of $2 to $2.20 for the period.

The company, one of the nation's largest department store chains, operates a total of 950 department stores under the Macy's and Bloomingdale's names along with regional flags in 49 states, Washington DC and Puerto Rico. It also has 720 bridal and formalwear stores.