Federated earnings rise 35 percent
By Rachel Katz
Bloomberg News Service
Federated Department Stores Inc., the owner of Macy's and Bloomingdale's, said fourth-quarter earnings rose 35 percent as the retailer offered fewer discounts and sold more of its own brands of clothing and housewares.
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Net income climbed to $460 million, or $2.50 a share, from $341 million, or $1.78, a year earlier, when it had restructuring costs. Sales in the three months ended Jan. 31 rose less than 1 percent to $5.05 billion, Cincinnati-based Federated said in a statement. Sales at stores open at least a year will rise as much as 8 percent this month, higher than Federated's prior forecast.
Federated Department Stores, parent of Macy's, is benefiting from an improving economy, one expert says.
Chief Executive Terry Lundgren expanded Federated's selection of more-profitable private brands such as Tools of the Trade cookware, helping the company compete with discounters. Lower inventory enabled the retailer to limit clearance sales that hurt gross margins. Consumers purchased more jewelry and monogrammed handbags for the holidays.
"A lot of the improvements have got to be the result of the improving economy," said David Dreman, who helps manage about $10 billion at Dreman Value Management LLC in Jersey City, N.J., including about 1.4 million Federated shares. "Federated's really come back nicely within this overall spectrum of the economy improving."
Shares of Federated rose $1.52 to $51.87 at 11:35 a.m. in New York Stock Exchange composite trading.
Federated has added the Macy's name to its regional department stores, such as Rich's and Lazarus, to expand the well-known chain.
