Federated and Kmart Post 40%-Plus Gains in Profit

Federated Department Stores Inc. and Kmart Corp. on Wednesday posted first-quarter profit gains of more than 40% as shoppers splurged on spring fashions and household goods.

Intimate Brands Inc., operator of Victoria’s Secret and Bath & Body Works stores, posted a 13% rise in first-quarter earnings to $46.4 million, or 19 cents a share, in line with analyst estimates.

Federated, whose chains include Macy’s and Bloomingdale’s, said its net income rose 45% to $87 million, or 40 cents a share, well above the 31-cents-a-share average estimate of analysts polled by First Call. Sales rose 7.3%, and sales at stores open at least a year grew 5%.

The performance eased concern about Federated’s $1.7-billion purchase of Fingerhut Cos. in March, which Federated had said might slow profit growth for the next year or two. Fingerhut had excellent performance in April, the first month that the catalog and Internet retailer’s results were included in Federated’s results, Federated said.

Kmart, the No. 2 U.S. discount retailer, said its profit increased 43% to $67 million, or 14 cents a share, matching analyst forecasts. Sales rose 8.4%, their biggest gain in four years, to $8.14 billion, with strength from store brands such as Jaclyn Smith clothing and Martha Stewart linens. Sales at stores open at least a year were up 6.5%, more than Kmart expected.

Intimate Brands’ sales rose 14% to $877.8 million. Same-store sales were up 13%.

The retailers have been squeezing more profit from sales by keeping inventories lean and forcing suppliers to absorb more costs.