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Federated, Kmart gain in 3Q
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November 10, 1999: 11:09 a.m. ET
Federated tops estimates; Kmart misses mark; Intimate Brands on target
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NEW YORK (CNNfn) - Two of the nation's major retailers -- Federated Department Stores and Kmart Corp. -- reported improved results in their most recent fiscal quarter. But while Federated exceeded analyst expectations, Kmart Corp. missed its mark.
Another retailer, Intimate Brands Inc. matched the consensus forecast by posting the same earnings per share as a year earlier.
Federated (FD), which operates such chains as Bloomingdale's, Macy's and Stern's, posted net income of $123 million, or 56 cents a diluted share, in the third quarter ended Oct. 30. A survey of analysts by First Call Corp. had expected earnings of 53 cents a share in the period.
In the year-earlier period, the company had income of $110 million, or 53 cents a share, before a $23 million after-tax charge for early payment of debt. With the charge, the company's net income in the prior year period was $87 million, or 42 cents a share.
Cincinnati-based Federated saw sales increase 16 percent to $4.2 billion in the period. Sales at stores open a year or more grew 3.9 percent in the period.
"This was a solid third quarter for Federated, propelled by strong sales and earnings in our department store segment and a level of performance in our direct-to-customer catalog and e-commerce businesses that was in line with what we had anticipated," said a statement from James Zimmerman, the company's chairman and chief executive. "We are entering the fourth quarter with our inventories in good shape, and we remain optimistic that it will be a good retail Christmas season."
For the first nine months of its fiscal year, Federated earned $347 million, or $1.65 a diluted share, compared with year-earlier results of $254 million, or $1.21 a share, including the special charge in the third quarter. Sales rose 13 percent to $12.1 billion for the period, while same-store sales increased 4.6 percent.
Federated's stock rose ¼ to 41-7/8 in Wednesday morning trading.
Disappointing results at Kmart
Kmart (KM), the Troy, Mich.-based retailer, had net income of $43 million, or 9 cents a diluted share, in its fiscal third quarter, compared with $38 million, or 8 cents a share, in the year-earlier period.
First Call Corp. forecast earnings of 10 cents a share.
Sales at Kmart (KM) rose 5.4 percent overall to $8.1 billion, and same-store sales rose 3.2 percent. But the cost of sales, buying and occupancy rose even faster, leaving the company with a gross margin rate for the period of 21.6 percent of sales, compared with 22.1 percent a year earlier. However, administrative costs as a percentage of sales dropped.
For the first nine months of its fiscal year, Kmart posted earnings from operations of $244 million, or 49 cents a diluted share, compared with $165 million, or 34 cents, a year earlier, when the results included a non-recurring early retirement charge.
However, net income for the latest nine months was $14 million, or 3 cents a share, after a $230 million charge for the disposition of operating leases it guaranteed for Builders Square due to its relationship with the home improvement chain's operator, Hechinger Co.
Sales for the first nine months rose 7.2 percent to $24.96 billion from $23.27 billion. Those sales gave Kmart the second-largest domestic store sales in the period after Wal-Mart Stores Inc. (WMT), although international sales pushed Sears Roebuck & Co. (S) ahead of Kmart for the overall position of the nation's second largest retailer.
Kmart's stock rose 7/16 to 10 in early Wednesday trading.
Intimate Brands hits mark
Specialty retailer Intimate Brands Inc. (IBI), owner of Victoria's Secret and Bath & Body Works, posted net income of $37.9 million, or 15 cents a diluted share, in the period ended Oct. 30, in line with analysts expectations. Profit in the fiscal third quarter slipped 4.7 percent from the $39.7 million it made a year earlier, but a 5 percent stock dividend earlier this year meant that earnings per share remained steady at 15 cents..
The company's sales rose 14.8 percent to $814.2 million in the period.
For the first nine months of its fiscal year, Intimate Brands' net income rose 10.3 percent to $170.2 million, or 67 cents a diluted share, compared with $154.3 million, or 58 cents a share, a year earlier. Sales increased 15.1 percent to $2.7 billion.
Intimate Brands stock fell ½ to 36-1/2 in early Wednesday trading. 
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