Federated ups income, guidance
By Don Hogsett -- Home Textiles Today, 3/3/2003
CINCINNATI — Rebounding from a deep loss a year ago as it piled up charges tied to the sale of its troubled Fingerhut unit, Federated Department Stores Inc. recorded a fourth-quarter profit of $321 million vs. a year-ago deficit of $447 million.
And pulling out all of the one-time items that obscure the bottom line, after-tax income from continuing operations rose by 10.0 percent, to $341 million from $310 million last year.
But infected by the same malaise that has hobbled other full-price retailers for the past two years, Federated sales slipped by 2.2 percent in the all-important Christmas quarter, to $5.0 billion from $5.1 billion. Same-store sales fell by 3.9 percent.
Delivering even more good earnings news to investors, Federated increased its earnings forecast for all of 2003, to $3.05 to $3.25 a share, even after paying about $45 million in store closing costs, up from an earlier forecast of $3.00 to $3.20. Investors clearly relished the news, and drove the retailer's stock price up by 2.9 percent, or $0.72 cents a share, to $25.54 in brisk trading on the New York Stock Exchange.
Average gross margin during the period improved 50 basis points, to 39.9 percent from 39.4 percent the prior year. At the same time, the retailer pared its stockpiles modestly, by 0.5 percent, or $17 million, to $3.4 billion.
In another lift to the bottom line, Federated reduced its interest expense by 20.5 percent, to $70 million from $88 million last year, a cash savings of $18 million.
For all of last year, Federated recorded a profit of $818 million, compared with last year's loss of $276 million. Sales were off by 1.4 percent, to $15.4 billion from $15.7 billion a year ago. Same-store sales were down by 3.0 percent
| Qtr. 2/1 (x000) | 2002 | 2001 | % chg |
| Sales | $5,017,000 | $5,132,000 | -2.2 |
| Oper. income (EBIT) | 634,000 | 587,000a | 8.0 |
| Net income | 341,000b | (447,000)b | — |
| Per share (diluted) | 1.78 | (2.27) | — |
| Average gross margin | 40.0% | 39.1%c | — |
| SG&A expenses | 27.3% | 25.7% | — |
| 12 months | |||
| Sales | 15,435,000 | 15,651,000 | -1.4 |
| Oper. income (EBIT) | 1,343,000 | 1,104,000a | 21.6 |
| Net income | 818,000 | (276,000)b | — |
| Per share (diluted) | 4.15 | (1.41) | — |
| Average gross margin | 40.0% | 39.1% | — |
| SG&A expenses | 31.3% | 30.7% | — |
| a-Operating income in the prior-year quarter was reduced by an $18 million inventory evaluation adjustment, and for all of 2001, operating income was reduced by an inventory valuation adjustment of $53 million. b-Fourth-quarter results in the 2001 quarter include $13 million in income from a discontinued operation, offset by a $95 million asset impairment charge and a $770 million loss on the sale of the Fingerhut operation. For all of 1992, earnings include $180 million in income from a discontinued operation, compared with a $770 million loss the prior year. The 12-month 2001 period also includes a $14 million loss from discontinued operations and a $10 million loss on the early retirement of debt. c-Average gross margin for the prior-year periods is stated on a recurring basis, excluding an $18 million inventory valuation adjustment to the prior-year fourth quarter and a $53 million adjustment to the 12-month period. |
|||
