Today's news reports indicate shaky consumer confidence in February, but apparently not for Federated Department Stores' (NYSE:FD) frequent shoppers. The name behind Macy's and Bloomingdale's said today that its fourth-quarter net income rose 35%, with a strong showing of same-store sales this month.
Shopping seems to be a pastime filling many a bored winter hour this year. Wal-Mart (NYSE:WMT) and Target (NYSE:TGT) both reported good quarters last week, with upscale retailer Nordstrom (NYSE:JWN) really going through the roof with a 74% increase in quarterly earnings. (Last Friday, Foolish contributor Tim Beyers was inspired to compare the discounter Wal-Mart with the pricier Nordy's.)
Federated fits someplace between the upper and lower ends of the shopping spectrum. And for its purposes, that was a good place to be. Its department store brands may have a shinier name than those of May Department Stores' (NYSE:MAY) Hecht's, Filene's, and Lord & Taylor, not to mention tons more fashion sense than Sears (NYSE:S) and J.C. Penney (NYSE:JCP).
An upbeat quarter isn't entirely unexpected, as Federated lifted guidance early this month. Today, the company said that for the quarter ended Jan. 31, net income rose to $460 million, or $2.50 per share, compared to $341 million, or $1.78 per share, in the same period a year ago. If you take out a one-time benefit related to reduced tax liabilities, it earned $2.29 per share. Federated linked higher profits to improved inventory management and margins, with inventory down 4.3% and gross profit margins up to 41% from 39.9%.
Going forward, things are sounding pretty confident on the same-store sales front, at least for now. Federated says same-store sales for February are plugging along well ahead of previous estimates, which anticipated an increase of 2% to 3%. Now, it sees same-store sales in the 7%-8% range for the month.
Federated investors, who also enjoy a regular dividend with their shares, may be feeling pretty fashionable today, with the stock hitting a new 52-week high of $51.95. However, the strong February sales only mark the second month of strong gains since flat or scant same-store sales for several months running. A real lag in consumer confidence could once again make mid- to upper-scale retailers look less attractive to shoppers.
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Alyce Lomax does not own shares of any companies mentioned. She now tries to keep a low profile in department stores after her harrowing Platform Shoes Incident in Nordstrom.
