Cincinnati, OH, August 9, 2006--Federated Department Stores reported better-than-expected second-quarter results on Wednesday, and raised its forecast for the second half of the year, sending shares higher in pre-market trading.
For the quarter ended July 29, the company reported net income of $317 million, or $0.57 per share, versus a prior-year profit of $148 million, or $0.43 per share.
Excluding May Company merger integration costs and related inventory valuation adjustments of $0.19 per share, and gains on the sale of credit receivables of $0.21per share, the company posted earnings from continuing operations of $0.49 per share in the latest quarter, exceeding internal guidance for net income of $0.39 to $0.44.
Revenue nearly doubled to roughly $6 billion from $3.62 billion in the year-earlier period.
Wall Street had forecast an adjusted profit of 44 cents per share, the average estimate of 11 analysts surveyed by Thomson Financial, on slightly higher sales of $6.07 billion.
Latest-quarter results included a previously announced cash refund from the Internal Revenue Service, which shaved Federated's income tax bill and interest expense. The IRS benefit bolstered profit by 16 cents per share.
The company said sales in stores open at least one year _ a closely watched performance gauge known as same-store sales _ rose 4.6 percent during the quarter.
Terry J. Lundgren, Federated's chairman, president and CEO, said, "We were pleased to have exceeded our earnings guidance this quarter, indicating that the Federated-May Company integration process remains solidly on track."
"We are still in the process of transitioning the former May Company locations with significant merchandise assortment change-outs, clearance sales of discontinued inventory and remodeling activity which is disruptive to the business, and our sales performance in these stores continues to lag," Lundgren added. "We are looking forward to getting this work behind us and returning to a more normalized pace of activity after the nameplate changes in September."
Looking ahead, Federated forecast third-quarter earnings per share of 15 cents to 20 cents and income of $1.40 to $1.50 per share for the fourth quarter, up from a previous view of $1.50 to $1.62 per share for the combined periods.
Full-year earnings are expected to range from $2 to $2.15 per share, excluding merger integration costs and related inventory adjustments and other items.
The company said same-store sales are expected to rise between 3 percent to 5 percent in each of the third and fourth quarters of 2006, up from an earlier forecast of 2 percent to 4 percent.
Federated backed its third-quarter sales forecast of $5.9 billion to $6.1 billion, and reaffirmed expectations for fourth-quarter sales of $9.1 billion to $9.4 billion.
