Federated Department Stores (Cincinnati) has cut its profits forecast nearly in half for the second quarter ending Aug. 4, 2001, citing slow sales and steep markdowns. Same-store sales are expected to decrease between 1 and 2 percent. Earlier company estimates had been that same-store sales would be flat for the quarter, or might even increase 1 percent.
The operator of more than 430 stores in 33 states under the Macy's, Bloomingdale's, Bon Marche, Burdines, goldsmith's, Lazarus and Rich's nameplates said it would mark down its current merchandise and “expects inventories at the end of July to be at appropriate levels to ensure a fresh flow of merchandise.”
The company seems to be suffering from the same malady that many apparel retailers are suffering from: Consumers are not buying apparel, especially store brands. The hope expressed by several industry analysts is that by taking its medicine now, in the form of steep markdowns, Federated is positioning itself for a strong holiday season.