Federated Department Stores reported a 27% increase in quarterly profit, which beat the expectations of the company as well as those of Wall Street analysts.
The company reported diluted earnings per share of 71 cents for the first quarter thanks to strong sales. Earnings per share in the quarter went up 34% from 53 cents for the first quarter of 2004.
“We obviously were very pleased with the quarter’s results and our above-expectations sales performance, especially since these comparisons are against a strong first quarter last year,” said Terry J. Lundgren, Federated’s chairman, president and CEO. “It demonstrates to us that focusing on sales is right for our business, and that our four key priorities – differentiated assortments, simplified pricing, an improved shopping experience and more effective marketing – are the right approach to making us a more attractive retailer.”
The positive financial report has gotten the company even more excited about its $11 billion takeover of May Department Stores. Completion of the deal is expected to occur in the third quarter. According to Reuters:
May on Tuesday reported weaker-than-expected profit because of poor demand for its private label clothing, but analysts said the disappointing performance would not hinder the Federated deal.
Federated forecast second-quarter profit of 80 cents to 85 cents per share, in line with Wall Street expectations for 82 cents per share. The retailer said it would not update its second-half forecast until it decides what to do with its credit business and determines when the May deal will close.
“We are more enthusiastic than ever before about the tremendous potential inherent in combining these two retail businesses, and eagerly await regulatory approvals so we may broadly communicate with May Co. employees to share the details of our exciting vision for the combined company,” Lundgren said.
Federated’s net income in the first quarter of 2005 was $123 million, up 27% compared to the net income of $97 million for the first quarter of last year. The company’s first-quarter sales totaled $3.605 billion, up 2.5% from those of last year’s first quarter.
Chris is a staff writer for Murdok. Visit Murdok for the latest ebusiness news.
