A Ray of Hope

Federated Department Stores Inc. (Cincinnati), one of the companies often cited when the woes of department store retailing are being discussed, announced that earnings and cashflow for the fiscal first quarter ending May 4, 2002, exceeding expectations.

Operating income for the quarter was $221 million, or 6.4 percent of sales, compared to $178 million, or 5 percent of sales, for the first quarter of 2001. Cash flow from operating activities was $169 million in the first quarter, compared to $3 million in the same period last year.

First quarter sales decreased 2.9 percent, both on a total and same-store basis. Earnings expectations for the remainder of fiscal 2002 are unchanged.

“We've had a strong start to 2002, with first quarter earnings and cash flow that significantly exceeded our original expectations,” said chairman and ceo James Zimmerman said, reiterating that the quality and quantity of the company's inventory going into the quarter had a better-than-anticipated impact on gross margins. “We are hopeful that this strong start bodes well for our ability to meet expectations for the remainder of the year.”

New stores opened during the quarter included Bloomingdale's units in Bridgewater, N.J., and Willowbrook, N.J.; Rich's in Columbus, Ga.; and Macy's in Capitola, Calif.

Federated currently operates more than 460 department stores in 34 states (plus Guam and Puerto Rico)under the Macy's, Bloomingdale's, Bon Marche, Burdines, Goldsmith's, Lazarus and Rich's nameplates.