Federated seeing signs of life in textiles
August 11, 2004-- Home Textiles Today,
CINCINNATI — Although soft home performed weakly during the second quarter, there are signs that it's beginning to pick up, analysts were told during Federated Department Stores' quarterly conference call this morning.
And despite the fact that the new Macy's Home Store merchandising organization is still in transition, it is beginning to have some impact. "Product is looking good and Hotel (Federated's proprietary Hotel Collection brand) is doing extremely well," said Karen Hoguet, chief financial officer.
The company reported net income of $78 million, or 43 cents per share, for the quarter ended July 31, down 35 percent from $120 million, or 64 cents per share, in the year-ago quarter. The results included a one-time $59 million charge related to a $273 million buyback of the company's long-term debt.
Sales were $7.1 billion, up 5.1 percent over last year's second quarter. Comps rose 5 percent. Floor coverings and furniture were among the poorest performers during the quarter, Hoguet said.
Stores that have been remodeled under Federated's "reinvent program" continue to outperform non-renovated stores, Hoguet said. Following a bump in the first year after remodeling, the reinvent stores settle into a performance that runs about one point better than other stores, she said. About 50 percent of Federated's store base will have been touched by the program by the early fourth quarter.
The company spent $19 million during the first half related to the Macy's Home Store centralization costs, which impacted second quarter earnings by 11 cents per share and first half earnings by 17 cents per share, according to the company's financial release.