Integration Slows Federated

By Staff -- Home Textiles Today, 3/12/2007 12:00:00 AM

Cincinnati —

Profits in the crucial Christmas quarter rose 4.9% at Federated Department Stores, to $733 million from $699 million last year, helped by a deep cut in interest expense that saved the retailer $78 million, deep cuts in operating costs, and $54 million in proceeds from a debt tender offer.

Acting as a drag and tugging at the bottom line was $167 million in costs tied to the integration of the May Department Stores acquired in August 2005, up from $106 million in integration costs in the same period last year.

The integration effect showed as sales at the department store titan fell by 4.3%, to $9.2 billion from $9.6 billion last year, hurt by the closing of about 80 duplicative stores from the May buyout. Still, the acid-test measure of same-store sales rose by 6.1%

Lending strength to the bottom line, Federated whittled down its operating costs by 10.6%, to $2.3 billion from $2.6 billion, yielding a cash savings of $275 million. Stockpiles were cut by 2.6%, but not enough to keep pace with the 4.3% drop in sales.

Federated Department Stores