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The Honolulu Advertiser
Posted on: Thursday, November 14, 2002

Federated reports huge jump in earnings

Advertiser News Services

CINCINNATI — Federated Department Stores, the owner of Macy's, said earnings jumped to $106 million in the third quarter, up from $3 million a year ago, but sales were flat as the retailer contended with the sluggish economy and plunging consumer confidence.

The company said yesterday it benefited during the quarter ended Nov. 2 from selling off parts of the Fingerhut online marketing business, plus lower price markdowns that resulted from reduced inventories.

Earnings per share were 54 cents, compared with 2 cents a year ago.

The third-quarter profits in 2001 were substantially reduced by restructuring costs of closing the Stern's department store group and converting the Hawai'i-based Liberty House stores into Macy's.

Sales for the quarter were flat at $3.479 billion, compared with $3.475 billion in the same period of 2001. At stores open for at least a year, sales declined by 2 percent.

The company's earnings per share from continuing operations totaled 38 cents, slightly exceeding the 37-cent expectation of analysts surveyed by Thomson First Call.

Shares of Cincinnati-based Federated, which has more than 460 stores, rose 76 cents to $30.55 at 4:16 p.m. in New York Stock Exchange composite trading.

They have dropped 25 percent this year.

For the first nine months of this fiscal year, profits totaled $477 million, or $2.37 per share, compared with last year's $1.71 and 86 cents. Sales totaled $10.4 billion, down by 1 percent from last year's $10.5 billion.

Federated said it still expects earnings from continuing operations to be between $1.95 and $2.05 per share for the fourth quarter — the key holiday shopping period for retailers — and $3.35 to $3.45 per share for the full fiscal year, which ends on Feb. 1.

Federated said it expects sales during the fourth quarter to be unchanged or down slightly at stores that have been open at least a year because of the slow economy and lack of consumer confidence.

The Cincinnati-based retailer operates more than 460 stores in 34 states including Macy's, Bloomingdale's, The Bon Marche, Burdines, Goldsmith's, Lazarus and Rich's.