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Federated beats Street
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February 27, 2001: 11:23 a.m. ET
Retailer beats 4Q forecasts despite tough sales environment
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NEW YORK (CNNfn) - Federated Department Stores Inc. reported fourth-quarter profits fell 26 percent but still topped Wall Street forecasts Tuesday despite a difficult holiday selling season.
The No. 6 U.S. retailer, which owns Macy's, Bloomingdale's and other chains, said net income fell to $332 million, or $1.65 a share, from $448 million, or $2.04 a share, a year earlier. In addition to a tough holiday season, it cited problems at its Fingerhut online unit.
Excluding one-time items, the retailer earned $2.15 a share in the latest quarter, topping analysts' forecasts of $2.10 a share, according to First Call, which tracks Wall Street forecasts.
Sales edged up to $6.1 billion from about $6.0 billion.
"This has been a disappointing year overall, primarily due to the negative impact of the Fingerhut credit problem on Federated's earnings performance," CEO James Zimmerman said in a statement, adding the company's department stores performed well despite the tough sales climate.
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In October, Federated (FD: Research, Estimates) cut jobs and operations at Fingerhut in an effort to boost profits. Before that action, the catalog and Internet business had been hit hard by credit problems. The company also announced plans this month to close its Sterns department stores and lay off as many as 2,600 employees.
Most retailers saw 2000 holiday sales fall off sharply from a year ago as a slowing economy, higher interest rates and a spike in fuel costs cut into consumer spending.
Despite the recent weakness, Federated still expects to reach its goal this year of per-share earnings of $4 to $4.25, Zimmerman said. That would exclude the costs of converting some of its Stern's stores in New York and New Jersey to Bloomingdale's and Macy's stores.
 Federated stock rose 30 cents to $46.01 in morning trading.
For the year, Federated lost $184 million, or 90 cents a diluted share, including charges of $962 million for restructuring Fingerhut and other items, compared with net income of $795 million, or $3.62 a share, a year earlier. Excluding one-time charges, the Cincinnati-based retailer said it earned $3.08 a share.
Sales rose 4 percent to $18.4 billion from $17.7 billion.
-- from staff and wire reports 
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