2 Chains Report Better-Than-Expected Profits
Federated Department Stores Inc. and Dayton Hudson Corp., two major retailers, reported higher-than-expected fiscal fourth-quarter earnings as a strong economy boosted sales and the companies kept a lid on costs.
Federated, the Cincinnati-based operator of Macy’s, Bloomingdale’s and other chains, said its earnings for the three months ended Jan. 30 grew 7.7% to $408 million, or $1.88 a share, 6 cents higher than analysts’ average forecast. Revenue rose 2.9% to $5.21 billion, and same-store sales, or sales at stores open at least a year, rose 4.1%. The chain said the results were helped by a late surge in holiday season shopping and tight cost controls.
Federated said it slashed prices to goose holiday sales after record-warm temperatures reduced demand for coats, sweaters and other winter clothing. To offset some of the profit lost to markdowns, it held down inventory and other operating costs.
Dayton Hudson’s profit grew 27% in the period ended Jan. 30, to $453 million, or 97 cents a share, well above the average of 90 cents analysts had expected, on higher sales at the Target discount stores and a rebound at the Mervyn’s chain. Revenue rose 13% to $10.1 billion. Sales at stores open at least a year were up 6.1%.
Profit at Target, which is drawing customers with a more upscale image and a greater focus on fashion than competing discounters, rose 26% to $646 million, as revenue increased 14% and same-store sales rose 6.8%.
Mervyn’s profit was flat, an improvement from declines in recent quarters, as the chain added more well-known brands; revenue rose 3.4% and as same-store sales grew 4.4%. Revenue at Minneapolis-based Dayton Hudson’s department stores rose 4.2%, with same-store sales up 3.5%. Of the 79 retailers that have reported quarterly earnings so far, 73% have beat estimates and 19% have matched them, earnings tracker First Call Corp. said.
At a Glance
Other earnings, excluding one-time gains and charges unless noted:
RETAILING:
* American Stores Co. said its operating profit jumped 37% for its fiscal fourth quarter to $131.6 million, or 47 cents a share, beating the average analyst forecast of 44 cents. The operator of supermarket and drugstore chains including Lucky Stores and Sav-on cited strong pharmacy sales and cost-control measures for the results for the three months ended Jan. 30. Sales grew 4.3% to $5.2 billion, and sales at stores open at least a year climbed 18%.
* HomeBase Inc. reported a profit of $414,000, or 1 cent per share, for its fiscal fourth quarter ended Jan. 30, contrasted with a net loss of $3.9 million, or 10 cents, for the corresponding period a year ago. Sales declined 6% to $309 million, but same-store sales increased 2.3%. The company said its remodeled store format helped improve results and that it will continue to increase inventory, sales personnel and advertising.
* OfficeMax Inc. reported an 8% increase in quarterly profit and said it plans to open 100 superstores this year and to resume its stock-repurchase program. The office-supplies retailer’s earnings for its fiscal fourth quarter ended Jan. 23 grew to $43.2 million, or 36 cents a share, from a year ago, matching estimates, even as average prices fell for the computers it sells. Sales increased 13% to $1.25 billion. Same-store sales fell 1%.
OfficeMax also said it plans to open five OfficeMax PDQ stores--smaller urban stores--this year; a superstore in Sao Paulo; and 10 stores and two delivery centers in Mexico and Japan. The company said it will resume repurchasing its shares under a $200-million program. It halted the buyback in mid-December when it began restructuring its computer segment to shift to selling higher-margin office computers.
