Federated Profit Falls 4% but Beats Forecast

Federated Department Stores Inc., which reportedly is trying to acquire May Department Stores Inc., said Tuesday that its fiscal fourth-quarter earnings fell 4% from a year earlier when it recorded a tax gain. The results still beat Wall Street estimates.

But the parent of Macy’s and Bloomingdale’s projected first-quarter earnings below analysts’ estimates and second-quarter profit at the low end of projections.

Federated shares fell $1.43 to $55.29 on the New York Stock Exchange, near the upper end of its 52-week range of $59.91 and $42.80.

Federated reported net income of $440 million, or $2.55 a share, for the quarter ended Jan. 29, compared with $460 million, or $2.50, a year earlier. Earnings per share were up because there were fewer shares.

Sales were flat at $5.1 billion. Sales at stores open at least a year, considered one of the best indicators of a retailer’s strength, increased 0.8%.

Excluding the tax benefit of $38 million, or 21 cents a share, profit was up 4%. Per-share earnings beat the consensus estimate of analysts surveyed by Thomson First Call by a penny.

Federated and May, the St. Louis-based operator of Robinsons-May and other chains, are reportedly making progress in negotiations toward a possible Federated purchase of May. May has suspended its search for a new chief executive during the talks with Federated, the New York Times reported Tuesday.

For 2004, Federated earned $689 million, or $3.86 a share, compared with $693 million, or $3.71, in 2003. Sales totaled $15.6 billion in 2004, compared with $15.3 billion in 2003.

Federated expects earnings of 45 cents to 50 cents a share in its first quarter of 2005, and 80 cents to 85 cents a share in its second quarter. That compares with analysts’ estimates, on average, of 53 cents a share for the first quarter and 81 cents a share for the second quarter.