[prior-sept-05/ Fashion News ASAP - Keep up to date with trendy Apparel Industry News ]

Federated 3Q Earnings Exceed Expectations

From: ASAP

Comments

Federated Department Stores, Inc. reported diluted earnings per share of 36 cents for the third quarter of 2003, exceeding both the company's original guidance of 25-30 cents a share and its revised guidance of 30-33 cents a share. This compared to diluted earnings from continuing operations of 38 cents a share in the same 13-week period last year.

For the first three quarters of 2003, Federated reported diluted earnings per share of $1.25, compared to diluted earnings from continuing operations of $1.48 a share in the same period of 2002.

Terry J. Lundgren, Federated's president and chief executive officer, said the company was pleased to have achieved an earnings performance in the quarter that exceeded prior guidance and expectations, driven by an improving sales trend, tight inventory controls and strong gross margins.

Operating Income

Federated's operating income totaled $173 million or 5.0 percent of sales for the quarter ended November 1, 2003, compared to operating income of $188 million or 5.4 percent of sales for the same period last year. Operating income in the third quarter this year included $29 million in store closing and consolidation costs. This included $20 million for the previously announced Rich's-Macy's integration in Atlanta and the scheduled closing of the Lazarus-Macy's store in downtown Columbus, OH. The remaining $9 million relates to the integration of Burdines and Macy's in Florida, which is the subject of a separate Federated news release issued today.

The company's operating income for the first 39 weeks of 2003 was $583 million or 5.7 percent of sales, including a total of $47 million in store closing and consolidation costs, compared to $709 million or 6.8 percent of sales in the same period of 2002.

Sales

Sales in the third quarter were consistent with expectations. Total sales of $3.486 billion for the third quarter of 2003 were up 0.2 percent compared to sales of $3.479 billion in the same period last year. On a same-store basis, Federated's third quarter sales were up 0.3 percent.

For the year to date, Federated's sales totaled $10.211 billion, a decrease of 2.0 percent from sales of $10.418 billion in the same period last year. On a same-store basis, Federated's sales for the first 39 weeks of 2003 were down 2.0 percent.

New stores opened in the third quarter included three new Bloomingdale's -- a home store in Oakbrook, IL, and two department stores in Atlanta at Lennox Mall and Perimeter Mall. In addition, Macy's West expanded its presence in Hawaii - adding new retail space at Prince Kuhio Plaza, Hilo; Queen Kaahumanu Center, Maui; and Kukui Grove, Kauai.

Cash Flow

Cash flow from continuing operating activities was $630 million in the first three quarters of 2003, compared to $272 million in the same period last year. After continuing investing activities of $356 million this year and $473 million last year, cash flow from continuing operations before financing activities was $274 million compared to a cash outflow of $201 million in the same period last year.

Fourth Quarter Expectations

Federated reaffirmed its earnings expectations for the fourth quarter of fiscal 2003 at $2.15-$2.20 a share. The company anticipates same-store sales for the fourth quarter to be down 1 percent to up 1 percent.

Federated, with corporate offices in Cincinnati and New York, is one of the nation's leading department store retailers, with annual sales of more than $15.4 billion. Federated operates more than 450 stores in 34 states, Guam and Puerto Rico under the names of Macy's, Bloomingdale's, Bon-Macy's, Burdines, Goldsmith's- Macy's, Lazarus-Macy's and Rich's-Macy's. The company also operates macys.com and Bloomingdale's By Mail.

This release contains certain forward-looking statements that reflect current views of the financial performance and future events of Federated. The words "expect," "plan," "think," "believe" and other similar expressions identify forward-looking statements. Any such forward-looking statements are subject to risks and uncertainties. Future results of the operations of Federated could differ materially from historical results or current expectations because of a variety of factors that affect the company, including transaction costs associated with the renovation, conversion and transitioning of company retail stores in regional markets; the outcome and timing of sales and leasing in conjunction with the disposition of company retail store properties; the retention, reintegration and transitioning of displaced company employees; competitive pressures from department and specialty stores, general merchandise stores, manufacturers' outlets, off-price and discount stores, and all other retail channels; and general consumer-spending levels, including the impact of the availability and level of consumer debt, and the effects of weather.

ASAP Fashion News Fast - Fashion news for the apparel industry and consumers to learn more about the clothing business.

Apparel Search  ASAP News

[borders/disc4aftr.htm]