Federated Profit Rises; Names CEO

Federated Department Stores Inc., the parent of Macy’s and Bloomingdale’s, posted a 10% increase in fiscal fourth-quarter profit and promoted President Terry Lundgren to chief executive.

Net income rose to $341 million, or $1.78 a share, from profit from continuing operations of $310 million, or $1.55, a year earlier. Sales in the quarter ended Feb. 1 fell 2.2% to $5.02 billion, Federated said. Lundgren, 50, replaces James Zimmerman, 59, who is retiring but will remain chairman.

Federated also raised its earnings outlook for the current fiscal year, but said same-store sales -- a key retail measure -- are still expected to be flat to down 1.5% for the year.

“At this point, we are focusing first and foremost on accelerating our comp-store sales growth,” Karen Hoguet, chief financial officer, told analysts on a conference call.

Cincinnati-based Federated cut expenses and reduced inventory by 3% on a comparable-store basis, leaving it with fewer items to mark down after holiday sales missed forecasts.

Excluding costs for closing stores and combining its Rich’s and Macy’s chains in the Southeast, Federated would have had profit of $1.99 a share. Analysts expected $1.95 a share.

Shares of Federated rose 72 cents to $25.54 on the New York Stock Exchange.