Federated's 3Q income down more than 38%
November 19, 2001-- Home Textiles Today,
Cincinnati — As the sluggish retail economy went in the third quarter, so went Federated Department Stores Inc.
The retail giant's third-quarter financial report was awash with extraordinary charges for both this year and last year. Boiled down, however, Federated reported net income for 2001's third quarter of $32 million, down more than 38 percent from last year's third quarter net income of $52 million. Adding in an extraordinary item and restructuring charges, the company's net for this year's third quarter was $3 million, compared with a net loss in last year's third quarter of $668 million.
Federated's third-quarter operating income totaled $149 million (not counting charges for restructuring and asset impairment). This was down nearly 12 percent from the $169 million in operating profit Federated managed a year ago.
Third-quarter sales came in at slightly less than $3.8 billion, down 10 percent from the $4.2 billion Federated checked out in last year's third quarter. The company's same-store sales fell 8.6 percent in the quarter, and the overall sales decline reflected the weak economy, its strategic downsizing of Fingerhut and the closing of its Stern's locations.
Federated was able to slice 10 percent from its selling, general and administrative expenses during the third quarter, to slightly more than $1.3 billion. As a percentage of sales, SG&A remained flat at 35.2 percent. Its average gross margin was also dead even with last year, at 39.2 percent.
James Zimmerman, Federated's chairman and ceo, said the company hopes that sales will strengthen in the fourth quarter with the onset of the holidays. However, he also repeated earlier statements expecting the company's same-store sales to fall another 7 percent to 10 percent in the fourth quarter.
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