Federated profits drop 35 percent

Don Hogsett, August 23, 2004

Federated Department Stores Inc. reported that second quarter profits fell almost a third as it paid a $59 million charge for the early repayment of debt, then added another $31 million in costs to shut down stores, consolidate Rich's and Burdine's and centralize its home store business.

Adding up the one-time costs and charges, earnings dropped 35 percent, to $78 million from $120 million during the same period a year ago.

Sales at the nation's largest department store edged up 3.3 percent, to $3.5 billion from $3.4 billion last year. Same-store sales increased an identical 3.3 percent. For the second half of the year, Federated is projecting a smaller increase in same-store sales of 1.5 to 3 percent, contributing to a forecasted annual increase of 3 to 4 percent.

Taking the biggest bite out of the bottom line, Federated paid a $59 million premium, or 20 cents a share, for the early payment of $273 million in long-term debt, a move that will ultimately save the company millions of dollars in interest expense. Adding another layer of costs, Federated paid $31 million to combine its Rich's-Macy's and Burdine's-Macy's divisions, shut down stores and centralize its home stores business.

Average gross margin edged up slightly during the period, to 41.1 percent from 41 percent a year ago, including an inventory valuation adjustment of $13 million related to the home-store centralization.

Federated Department Stores Inc.

Qtr. 7/31 (x000) 2004 2003 % chg
Sales $3,548,000 $3,434,000 3.3
Oper. Income (EBIT) 245,000 264,000 -7.2
Net income 78,000 120,000 -35.0
Per share (diluted) 0.43 0.64 -32.8
Average gross margin 41.1% 41.0% --
SG&A expenses 34.2% 33.3% --
Six months 2004 2003 % chg
Sales 7,065,000 6,725,000 5.1
Oper. Income (EBIT) 462,000 410,000 12.7
Net income 175,000 166,000 5.4
Per share (diluted) 0.96 0.88 9.1
Average gross margin 40.6% 40.1% --
SG&A expenses 34.1% 34.0% --


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!