Being a bargain hunter, I had given up shopping at department stores in favor of discount retailers. However, now that I'm older and a little wiser, I can see that the department store experience has its merit.
The retailing industry has niche markets that have created a vast shopping landscape. The upscale market is served by such department stores as Saks
Federated's second-quarter earnings of $0.63 per share (if you take out the $0.20 a share of one-time, long-term debt repurchase costs) came in slightly ahead of its expectations of $0.57 to $0.62 per share. The company expects a 1.5% to 3% increase in same-store sales in the second half of 2004, which should lead to 3% to 4% same-store sales growth for the full fiscal year. Management also forecasted slightly higher earnings for 2004 than previously expected. Excluding costs associated with the long-term debt purchase, earnings are expected to be in the range of $3.90 to $4.00 per share from the previous expectation of $3.80 to $3.90 per share.
If you scan the July same-store sales for the retailing industry, a few trends become evident. Upper-crust department stores did quite well, with gains of 16.6% at Neiman Marcus, 6% at Nordstrom, 3.7% at Federated, and 5.5% at Saks. Some specialty retailers struggled through the summer doldrums, with losses of 5% at Gap, 2.1% at Ann Taylor
Federated has leveraged its retail experience into one of the more solid companies in the industry. I see May Department Stores'
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Phil Wohl spent more than 12 years on Wall Street and now concentrates his writing on more fictional characters. He has no stake in any firm mentioned above.