Federated Department Stores
chalked up better-than-expected earnings Wednesday in its first quarterly report since completing its megamerger with longtime rival
May Department Stores
The department store giant said it earned $436 million, or $1.79 a share, for its third quarter, up from $74 million, or 42 cents a share, in the same quarter last year. Those results got a boost from the sale of credit card receivables to
and pretax integration costs for its acquisition of May.
Excluding special items, the company earned 36 cents a share from continuing operations, including a 3-cent gain from the Visa/MasterCard antitrust litigation settlement. That beat Wall Street's consensus estimate calling for earnings of 23 cents a share. Federated said previously it was expecting earnings of 20 cents to 25 cents a share.
Shares of the retailer were recently up $2.31, or 3.6%, to $66.22.
Sales for the quarter jumped 64% to $5.79 billion, thanks largely to the addition of May's chains, including Lord & Taylor, Filene's and Marshall Fields. Same-store sales rose 0.6%, despite some locations having to close during the quarter because of hurricane damage.
In June, Citigroup said it would buy $6.6 billion of credit card assets from the company following its merger. Federated also plans to divest its bridal business, along with a number of stores, and it will convert many of May's stores to the Macy's nameplate.
For the fourth quarter, Federated said it's expecting earnings of $2 to $2.20 a share, including items. Excluding merger-related costs of $100 million to $150 million, it expects fourth-quarter earnings from continuing operations of $2.35 to $2.45 a share. The company also forecast a same-store sales gain of 1% to 2% for the quarter.