Are you all shopped out? Despite what you may have heard about those January post-holiday shopping doldrums, Federated Department Stores (NYSE:FD) had a good month. So good, in fact, that the company has raised its earnings expectations. Nonetheless, investors took a sour approach to the deal, bidding the shares down in early trading.

Federated raised its fourth-quarter earnings guidance to $2.25 to $2.27 per share, higher than its November guidance for $2.15 to $2.20 per share. The new range excludes tax-related gains. For 2003, it sees earnings of $3.47 to $3.49 a share. Same-store sales for the company behind Macy's, Bloomingdale's, and Burdines also increased 5.5% in January, even though it had previously expected same-store sales up or down 1%.

Despite news reports of retailers running out of steam in January, Federated thinks that the month's sales figures bode well for the rest of the year. The company occupies a middle-of-the-road pricing approach, so that it competes with other names you might find in the local mall. These include May Department Stores (NYSE:MAY) (known for Hecht's and Lord & Taylor), J.C. Penney (NYSE:JCP), Nordstrom (NYSE:JWN), and Sears (NYSE:S), as well as discounters such as Wal-Mart (NYSE:WMT) and Target (NYSE:TGT).

However, simultaneous with the earnings news, was word of a centralization of Federated's home-related operations, which may result in some job cuts and transition costs. It put a 90-day tag on when it can comment on the financial aspect of the plan, though it said it doesn't expect transition costs to have a material impact on earnings.

Recent emphasis on the home -- spurred by the rash of homebuying -- has made the home-furnishing sector pretty popular. Last year, Federated's home-related category represented $2.6 billion, or 19%, of total sales for all stores under the Macy's brand. It argues that home fashions are less regionally and seasonally motivated than other areas of the business, and thereby ripe for a centralized approach.

It sounds like Federated is banking on the assumption that families in, say, the suburban Midwest furnish their homes like they do, for example, in the more urban East Coast cities. While this move may indeed cut precious costs, it's up in the air whether it will jump-start the company's home-furnishing category.

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