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Federated Pushes Profits

Cincinnati — Federated Department Stores boosted its third quarter net income by more than 10 percent, to $74 million.

Terry Lundgren, Federated's chairman, president and CEO, said the performance exceeded the company's expectations.

Federated's sales were just slightly better than break-even for the third quarter, and its operating income increased by a modest 1.2 percent. Same-store sales edged up 0.4 percent for the quarter. The bottom line benefited from a reduction in interest expense for the quarter of nearly 10 percent. Selling, general and administrative expenses fell 20 basis points during the period.

Net income and operating income achieved healthy gains for the first nine months of the year. Net income rose by more than 6 percent to $249 million, and operating profit jumped more than 9% to $637 million. Sales grew by more than 3 percent.

Federated said it expects a modest fourth quarter, at best. Same-store sales are expected to rise from 1.5 percent to 3 percent.

Federated Department Stores

QTR. 10/30 (x1000) 2004 2003 % CHANGE
Net sales $3,491,000 $3,486,000 0.1
Operating income 175,000 173,000 1.2
Net income 74,000 67,000 10.4
Earnings per share 0.42 0.36 16.7
Average gross margin 39.8% 40.0% --
SG&A percentage 34.8% 35.0% --
Nine months
Net sales 10,556,000 10,211,000 3.4
Operating income 637,000 583,000 9.3
Net income 249,000 233,000 6.9
Earnings per share 1.38 1.25 10.4
Average gross margin 40.4% 40.1% --
SG&A percentage 34.4% 34.4% --


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