Posted at 11 a.m., Wednesday, August 15, 2001

Liberty House owner reports profits

Associated Press

CINCINNATI — Federated Department Stores Inc., the owner of Liberty House, reported a 75 percent increase in second-quarter profits, due in part to a one-time tax benefit. But a sluggish economy caused Federated to pare down the top range of its full-year earnings forecast for the second time in less than two months.

The results, announced today, beat Wall Street expectations by 2 cents.

The company, which operates Bloomingdale's and Macy's, earned $110 million, or 55 cents per share, for the three months ended Aug. 4, up from $63 million, or 30 cents per share, a year ago.

The results include restructuring charges related to the integration of the newly acquired Liberty House stores into Macy's West. Federated bought the 152-year-old Liberty House chain last month for $200 million.

The results also include a tax benefit of $44 million and costs related to the shutting down of Stern's Department Stores.

Excluding those items, Federated's earnings per share were 43 cents. That compares with 30 cents a year ago, a figure that was affected by escalating credit delinquencies at its Fingerhut catalog unit.

Analysts surveyed by Thomson Financial/First Call expected 41 cents per share.

Federated's stock climbed 97 cents to $38.37 in afternoon trading on the New York Stock Exchange.

Sales totaled $3.73 billion, down 8 percent from $4.1 billion a year ago. Lower sales for the quarter were attributed, in part, to the closing of Stern's and cutbacks at Fingerhut.

Sales at stores open at least a year, known as same-store sales, were down 4.8 percent for the quarter. Same-store sales are the best indicator of a retailer's health.

For the full year, Federated said it now expects earnings, excluding restructuring costs, to be between $3.60 and $3.80 per share compared with a previous forecast of $3.60 to $3.90 a share.

The consensus from Thomson Financial/First Call was $3.55. The range was from $3.89 to $3.21 per share.

The higher end likely isn't achievable in light of the sluggish economy, said James Zimmerman, chairman and chief executive.

In early July, Federated had reduced its full-year forecast to a range of $3.60 to $3.90, from $4.00 to $4.25 per share.

For the six-month period ended Aug. 4, earnings were $168 million, or 83 cents per share, compared to $152 million or 72 cents per share, a year ago.

Sales were $7.55 billion from $8.01 billion a year ago.

In addition to Bloomingdale's and Macy's, the company operates under such names as The Bon Marche, Burdines, Goldsmith's, and Lazarus. It also operates Macys.com, Bloomingdales.com and Bloomingdale's By Mail units and the Fingerhut catalog and electronic-commerce subsidiary.