Federated Department Stores, Inc. saw total sales of $2.026 billion for the month of May, an improvement of 70.2% over last year’s $1.189 billion. On a same-store basis, Federated’s sales for the month of May were up 9.2%. This is above the company’s guidance for a same-store sales increase of 4% to 6%, which included the shift of a major Macy’s promotional event into May this year from April last year.
For the first 17 weeks of fiscal 2006, Federated’s sales totaled $7.956 billion, up 64.7% from total sales of $4.830 billion in the first 17 weeks of 2005. On a same-store basis, Federated’s year-to-date sales were up 2.2%.
“We are very pleased with our same-store sales for the month of May because they reflect strength in the Macy’s and Bloomingdale’s stores that are the basis for our business going forward,” said Terry J. Lundgren, Federated’s chairman, president and chief executive officer.
Federated expects same-store sales in June to increase by 2% to 3%. Given the better-than-expected same-store sales in the month of May, the company’s guidance now is for a second quarter same-store sales increase of 4% to 6%, an improvement from previous same-store sales guidance of up 3% to 5% for the second quarter. However, sales were weaker-than-expected in the month of May in former May Company stores that will convert to Macy’s in September. As a result, the company continues to expect total sales of $6 billion to $6.25 billion in the second quarter.
The company’s earnings guidance remains unchanged. On a post-split basis (Federated shares will split two-for-one effective after close of trading on June 9, 2006) including the previously announced tax settlement, Federated’s guidance is for earnings per diluted share excluding one-time merger integration and inventory valuation costs and gain on sale of credit receivables of 39 cents to 44 cents in the second quarter of 2006, $1.50 to $1.62 in the third and fourth quarters combined, and $1.91 to $2.04 for the year as a whole.
Federated’s total sales for the month of May and 2006 year-to-date include the May Company acquisition, which was completed Aug. 30, 2005. Federated’s same-store sales include only Macy’s and Bloomingdale’s locations. Excluded from Federated total sales are 75 duplicate stores where clearance sales are in progress or completed. Also excluded are the Lord & Taylor and Bridal Group divisions, which the company intends to divest and are being treated as discontinued operations.
Federated said that, in the month of May, it completed the previously announced sale of seven duplicate department store locations to Boscov’s, Inc. The sale of another three locations to Boscov’s is expected to be completed in June. These are among 80 duplicate locations Federated announced for divestiture as a result of its acquisition of May Company. Divestiture of the 80 locations is expected to generate after-tax proceeds of $400 million to $500 million. To date, Federated has announced agreements to sell 55 duplicate locations, including the 10 to Boscov’s.
