Cincinnati, OH, August 12--Federated Department Stores reported stronger sales during the three months through the end of July and the retailer said it has seen an encouraging response to its early fall merchandise in recent weeks.
The operator of Macy's and Bloomingdale's said it expects its same-store sales to increase between 1.5% and 3% during both the fiscal third and fourth quarters, following a 3.3% rise in the second quarter ended July 31.
"So far, so good," chief financial officer Karen Hoguet said in a call discussing the quarterly results. "We're feeling good about the fall fashion."
Federated's profits slid 35% in the quarter as the company took charges related to debt repurchases and store closings. Net income was $78 million, or 43 cents a share, down from $120 million, or 64 cents a share, in the year-earlier period ended Aug. 2.
The latest results included costs of $59 million, or 20 cents a share, for the repurchase of $273 million in long-term debt. The latest results also included store closing and consolidation costs of 11 cents a share, versus similar costs of three cents a share in the year-earlier quarter.
Riding a fresh wave of brightly colored spring fashions, sales rose 3.3% to $3.55 billion from $3.43 billion a year earlier. Sales at stores open at least a year, or same-store sales, also rose 3.3%.
Federated met rising demand for new, higher-priced apparel lines from big-name designers like Ralph Lauren, Tommy Hilfiger and Donna Karan.
Markdowns were few as the company controlled inventory well, Hoguet told analysts. Sportswear, tailored fashions for men, jewelry, cosmetics and handbags were especially strong performers.
However, costs related to pensions and store consolidations will continue to drive expenses up 2% to 3% during the second half of the year, Hoguet said.
Federated predicts earnings of between 35 cents and 40 cents a share in the third quarter compared with 36 cents a share a year earlier, and $2.45 and $2.55 a share in the fourth quarter compared with $2.50 a share last year.
