Federated, Nordstrom Beat Forecasts, Cite Cost Controls

Federated Department Stores Inc. and Nordstrom Inc. reported better-than-expected earnings for the latest quarter even though sales were hurt by consumers’ preference for more value-oriented stores.

Both department store operators credited better controls over costs for their performance.

Cincinnati-based Federated, whose chains include Macy’s and Bloomingdale’s, said its fiscal third-quarter profit rose 4.8% to $110 million, or 50 cents a share, beating analysts’ average estimates by a penny.

Revenue slipped 2.6% to $3.65 billion as warm autumn weather hurt sales of sweaters and jackets in the last two months of the period. Sales at stores open at least a year declined 1.3%. Federated’s gross margin remained steady at 39% as it avoided promotions.

Jeffrey Stein, an analyst at McDonald & Co. Investments, said Federated’s better-than-expected results were helped by lower selling, general and administrative expenses and lower interest expenses.

Seattle-based Nordstrom said its fiscal third-quarter earnings grew 7% to $38.7 million, or 27 cents a share, a penny higher than estimates.

Sales edged up less than half a percent to $1.09 billion at the nation’s seventh-largest department store chain. Sales at stores open at least a year declined 4.2%, while new-store and catalog sales rose 4.6%.

Nordstrom is placing more emphasis on selling merchandise at full price and better managing its inventory to avoid steep markdowns. It also has made its buyers more accountable for the merchandise they order, analysts said.

Retailer Intimate Brands Inc. said its fiscal third-quarter profit rose 12% to $39.7 million, or 16 cents a share, matching estimates, as it marketed new lingerie at its Victoria’s Secret stores and mailed fewer catalogs.

The Columbus, Ohio-based firm, which also operates the Bath & Body Works chain, said revenue rose 2.8% to $709 million. Sales at stores open at least a year were up 4%.

At a Glance

Other earnings, excluding one-time gains and charges unless noted:

* Carmike Cinemas Inc. said its third-quarter net income rose a better-than-expected 6.5% to $8.76 million, or 77 cents a share, 2 cents higher than forecasts. The third-largest U.S. movie theater chain said newly purchased locations boosted results. Revenue grew 4.7% to $134.7 million.

* United Parcel Service of America Inc. posted a third-quarter profit of $449 million, or 81 cents a share, contrasted with a loss of $10 million, or 2 cents, in the year-earlier period when its drivers struck for 15 days. Revenue jumped 28% to $6.16 billion. The world’s largest package delivery company said both domestic and international business improved.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Earnings Watch

A sampling of companies reporting quarterly earnings Wednesday, ranked by year-over-year-growth, and companies due to report today, ranked by analysts’ forecast change in earnings per share (EPS) from the year-ago quarter, compiled by First Call:

Reporting Wednesday

*--*

Pct. above/ 1997 Ticker Consensus Actual below 3rd-qtr. Company symbol EPS EPS estimate EPS Nordstrom NOBE $0.26 $0.27 +4% $0.23 Federated Dept. St. FD 0.49 0.50 +2 0.47

Year- over-year Company % growth Nordstrom +17% Federated Dept. St. +6

*--*

Reporting Today

*--*

Ticker Consensus Year-ago Predicted Company symbol EPS estimate quarter pct. chg. Kmart KM $0.08 $0.04 +100% Dell Computer DELL 0.27 0.18 +50 The Gap GPS 0.56 0.40 +40 Staples SPLS 0.22 0.17 +29

*--*

Note: Yearnovernyear growth and percentage changes are based on earningsnpernshare figures and may differ from percentage changes based on total profit.

For more information via the Internet, check https://www.firstcall.com.