May acquisition costs weaken bottom line at Federated
May 10, 2006,
Cincinnati -- Still picking up the tab for last year's buyout of May Department Stores, Federated Department Stores recorded a first quarter loss of $52 million, compared with a year-before profit of $123 million.
Sales in the opening quarter climbed by 62.3% to $5.9 billion from $3.6 billion last year, as Federated layered on sales from May stores. Same-store sales were flat during the quarter, better than the 0.5% to 1.5% decline the retailer had earlier cautioned analysts to expect. Giving the top line a boost, said Terry Lundgren, chairman and ceo, were "stronger than expected sales at Macy's and Bloomingdale's stores."
The company forecast a per-share profit for $3.50 to $3.75 for 2006. Same-store sales are projected to grow by 3% to 5% during the second quarter, and by 2% to 4% in the third and fourth quarters combined.
But Wall Street had apparently been hoping for more, and backed away from the stock in the hours after the retailer put out the news this morning. By mid-day, Federated stock had drifted lower by $1.03 a share, or 1.3%, to $77.92.