|Federated Department Stores said fourth-quarter profit rose 5 percent, but its earnings forecast for the year falls short of analyst expectations. (Kiichiro Sato/Associated Press)|
Federated will change name to Macy's Group
NEW YORK -- Federated Department Stores Inc. reported strong fourth-quarter profits yesterday and said it will change its name to Macy's Group Inc. But the department store operator -- still struggling to integrate former May Department Stores Co. stores -- offered a profit forecast well below Wall Street expectations.
Cincinnati-based Federated, which also operates Bloomingdale's, said stronger sales at established stores and lower costs drove fourth-quarter earnings up 5 percent to $733 million, or $1.40 per share, from $699 million, or $1.26 per share, in the prior-year period.
Stripping out the costs of integrating May stores, Federated said earnings for the latest quarter were $1.66 per share. Analysts, who exclude one-time charges and gains from their estimates, expected earnings of $1.58 per share.
Federated, which is building a national department store brand under Macy's, plans to seek approval for the name change from shareholders during its May annual meeting.
"Most customers don't know what Federated Department Stores stands for, and obviously the name brand recognition for our new name is an easy decision for us," said chief executive Terry J. Lundgren yesterday, noting that 90 percent of sales are coming from the Macy's brand.
Federated changed the name of more than 400 May stores to Macy's last year after acquiring its former rival in August 2005. Those stores, which operated under the former nameplates of Filene's, Hecht's, and Marshall Field's struggled during the holiday season, though business is rebounding, company officials said.
Sales at stores open at least one year -- considered a key indicator -- rose 6.1 percent during the quarter.
Federated said it expects profit of $2.45 to $2.50 for the year excluding integration costs of $100 million and $125 million. Analysts were looking for earnings of $2.84.