May acquisition costs weaken bottom line at Federated

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.

Weighing down the bottom line were store closing costs that totaled $123 million, another $6 million in inventory valuation adjustments, and interest costs of $138 million on takeover debt. Pulling out all of the one-time costs stemming from the acquisition, Federated managed to eke out an operating profit of $143 million, down 43.3% from $252 million last year, hampered in part by weakness at acquired May stores.

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.

Home & Textiles Today Staff | News & Commentary

 Home Textiles Today is the market-leading brand covering the home and textiles markets, offering a comprehensive package of print and online products. Home & Textiles Today provides industry news, product trends and introductions, exclusive industry research, consumer data, store operations solutions, trade show news and much more.

Featured Video

  • Live From New York: Fashion Comes Across the Pond

    Camera Icon More Videos

Subscribe to
Home & Textiles Today eDaily
Receive the news you need to know about the trends in the industry delivered right to your inbox.

CURRENT ISSUE

HTT Cover October 2017

See the October 2017 issue of Home & Textiles Today. In this issue, we look at the Top 25 Online Retailers.  H&TT's exclusive annual ranking of the biggest online sellers of home textiles finds that while pure play etailers continue to fly, bricks & clicks are digging into omnichannel. See details!