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Upscale items elevate
profits for Macy’s
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Federated Department Stores Inc. said third-quarter earnings rose 10 percent, beating analysts' estimates, on lower costs and the sale of higher-priced apparel such as men's suits.
Net income at the owner of Macy's and Bloomingdale's jumped to $74 million, or 42 cents a share, from $67 million, or 36 cents, a year earlier. Sales in the three months ended Oct. 30 rose 0.2 percent to $3.49 billion, the Cincinnati-based retailer said in a press release today.
Chief Executive Terry Lundgren controlled inventory and reduced costs by $60 million. Profit was also boosted by demand for upscale items such as cashmere apparel and private store brands including Tasso Elba men's clothing after hurricanes hurt sales in September.
"They definitely are the best in class," said A.G. Edwards & Sons Inc. analyst Robert Buchanan, who rates the shares "hold." "They give a reason to shop their stores" with private brands.
Federated was expected to report profit of 39 cents a share, an estimate of 17 analysts surveyed by Thomson Financial.
Sales at stores open at least a year rose 0.4 percent, the company said, boosted by the sale of luxury goods. Demand has been strong for cashmere gloves and higher-price linens in Federated's Hotel line, Lundgren said in an interview in September.
Shares of Federated rose 5 cents to $53.85 at 4:15 p.m. in New York Stock Exchange composite trading. They have risen 14 percent this year.
Rival May Department Stores Co., which owns Hecht's and Lord & Taylor, yesterday said profit plunged 83 percent because of costs related to its purchase of the Marshall Field's chain and a decline in same-store sales. Shares of St. Louis-based May rose $1.13 to $28.01.
Federated twice reduced its forecast for the quarter in September after Hurricanes Jeanne and Frances devastated parts of Florida and forced the company to close its 68 stores in the state. The storms hit as shoppers finished back-to-school shopping.
"The stronger trend we saw in October in markets across the country was encouraging," Lundgren, 52, said.
