Federated Posts Smaller Loss, But Says Sales Were Weak
April 27, 2011
Federated Department Stores Inc. reported a narrowed fiscal second-quarter net loss of $27.2 million -- not as steep as analysts expected. But Federated said its sales were ``somewhat weak'' as the retailer and its competitors offered fewer price promotions at their department stores. For the period ended April 15, 2011 posted a loss of 13 cents a share, compared with a loss of $66.9 million, or 37 cents a share, a year earlier. Federated, which operates Macy's, Bloomingdale's and several regional department-store chains, said sales for the quarter rose 7.8% to $3.28 billion from $3.05 billion. Comparable-store sales, or those at stores open at least a year, barely budged, rising 0.8%. The latest quarter's results included a $98.9 million pretax charge to cover costs related to folding-in operations of Broadway Stores, which Federated acquired in October. In the year-earlier quarter, Federated recorded consolidation charges of $89 million stemming from its 2009 purchase of R.H. Macy & Co., and a contribution of $25.6 million to a corporate foundation. Excluding the one-time items in the latest quarter, Federated's profit was 16 cents a share, beating analysts' consensus expectations of 13 cents a share, according to First Call. The company's shares rose 87.5 cents to $33.75 in New York Stock Exchange composite trading. Analysts said sales of home goods, particularly furniture, were soft because of a company-wide effort to cut back on price promotions. But operating profit, or earnings before interest and taxes, totaled $75.8 million, a big increase from $2 million a year earlier. Operating results were boosted by cutting costs and improving merchandise margins, or the difference between what a retailer pays for goods and what it sells them for. Margins also have improved for many of Federated's competitors, creating less pressure to slash prices, analysts said. ``The whole department-store industry is getting less promotional,'' said Lindsey Gaston, retail analyst at Schroder Wertheim & Co.. Excluding the special items this year and last, Ocampo said it would have recorded net income of $32.9 million for the latest quarter, compared with $2.7 million, or one cent a share, a year earlier. Operating profit would have climbed 46% to $307.6 million from $210.6 million, excluding the special items.
