Liberty House buyer lowers expectations

Associated Press

CINCINNATI — Federated Department Stores Inc., dogged by sluggish sales stemming from the weak economy, reduced its second-quarter earnings estimates by more than one-third yesterday and said earnings for the year also will be below expectations.

The stock of the retailer — which is soon to be the owner of Hawai'i's Liberty House retail chain and is best known for its Macy's and Bloomingdale's stores — sank nearly 6 percent on the news, falling $2.37 to $38.01 in heavy trading.

Federated now expects its second-quarter earnings to be between 40 and 50 cents per share, excluding costs of an ongoing restructuring. The previous forecast had been 70 to 75 cents a share. The company reduced its earnings estimate for the year to between $3.60 and $3.90 a share from $4 to $4.25.

Analysts surveyed by Thomson Financial/First Call had expected earnings of 65 cents for the quarter ending in July and $3.92 for the year.

Sales have fallen short of expectations for the first six months of the year across the retailing sector and Federated is feeling the squeeze, said analyst Jeffrey Stein of McDonald Investments Inc.

Stein said he doesn't expect sales to substantially improve until the economy responds to the Federal Reserve's six interest-rate cuts during the past six months. That may not happen until the first three months of 2002.

Until then, Federated and other merchants will have to resort to promotions and discounts to clean out spring and summer items for the fall offerings, Stein said.