Federated sales, earnings outlook rise
Pittsburgh Business Times
Federated Department Stores Inc. ended its fiscal year with sales that outpaced its projections about threefold, helping the chain recover from a lackluster Christmas and encouraging it to increase its earnings outlook.
The parent of Macy's and Bloomingdale's said sales at stores open at least year rose by 8.6 percent in January. It had projected a gain of 1.5 percent to 3 percent, while analysts surveyed by Thomson Financial forecast a gain of 4.6 percent.
Not included in those figures, however, were receipts from May Co. stores, acquired in 2005. Those sales will begin to be counted this month.
As a result of the better-than-expected gain, Federated enhanced its fourth-quarter earnings outlook to $1.55 to $1.60 per share, from $1.40 to $1.50. The news apparently delighted Wall Street. Shares in Federated (NYSE: FD) rose $1.43 in morning trading, to $42.78.
Total sales, which do include May, rose 19 percent, to $1.8 billion from $1.5 billion. The gain accounts for this past January being a five-week month compared with a four-week month in 2006. The sales also reflect lost operations from 78 stores that were sold off in the year.
For the 53-week year, total sales rose 20.4 percent, to $27 billion from $22.4 billion. On a same-store basis, sales rose 4.4 percent.
In a press release, Federated CEO Terry Lundgren said consumers were motivated to use gift cards received for the holidays, and that cold weather stimulated further urges to buy. He said sales trends continue to improve at the May stores, where activity at some of the converted store had been lagging.
"All in all, 2006 was a great year in which we transformed our company and embraced an extraordinary amount of positive change while exceeding our initial earnings targets," Lundgren said. "This is a testament to the strategy we have put in place and to the strength of our organization. We look forward to this momentum carrying into 2007."
Federated will report its full-year earnings on Feb. 27.
Same-store sales are sales at stores open at least a year and do not include results from locations that opened or closed within that period.
Federated is not the only retailer to beat expectations. Here is how others performed in January, which is the last month of the fiscal year for most chains:
Wal-Mart (NYSE:WMT) posted a 2.2 percent increase in same-store sales, beating analyst estimates of 1.8 percent.
Target Corp. (NYSE: TGT) said its sales gained 5.1 percent, versus a 4.6 percent estimate.
Saks Inc. (NYSE: SKS) beat estimates of 7 percent to report an 11.4 percent gain.
J.C. Penney Co. (NYSE: JCP) reported a 3.6 percent gain, just edging past a 3.5 percent estimate.
Gap Inc. (NYSE: GPS), which has been reporting losses, even beat expectations. It posted flat sales when analysts expected a 7.7 percent decline.
Limited Inc. (NYSE: LTD) reported an 11 percent gain, beating a 7.8 percent forecast.
Among those whose sales fell short of forecast were Dillard's Inc. (NYSE: DDS). Sales at the chain slipped by 3 percent, while analysts expected a decline of 1.2 percent. And AnnTaylor (NYSE: ANN) said sales dropped by 10.2 percent, while Wall Street expected 5.4 percent.
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