News

Federated Projects First-Quarter Loss

BY CSA STAFF

Cincinnati, Federated Department Stores said it expects to post a loss in the fiscal first quarter amid weaker sales in existing stores. The company projects a loss of 5? to 15 cents per share in the quarter, on sales of between $5.75 billion to $6 billion. Same-store sales are expected to decline between half a percent to 1.5%.

Federated said it expects fiscal 2006 sales of $27.25 billion to $27.75 billion, with the largest portion coming in the second half of the year. Full-year same-store sales are expected to rise from 2% to 3%.

“The integration of Federated and May Company is on track and we are optimistic about the success of Macy’s and Bloomingdale’s a national brands,” said Federated CEO Terry Lundgren said in a statement. “Forecasting for 2006 with precision is particularly challenging because of the number of variables related to the integration. While 2006 is a transition year, we expect significant improvement in 2007 and a return to our historical peak levels of profitability, adjusted for the impact of the sale of credit portfolios, by the 2008-2009 period.”

Three new stores are planned to open in 2006, including a Bloomingdale’s in downtown San Francisco. The chain has budgeted capital expenditures at $1.6 billion for the year, followed by $1.1 billion to $1.2 billion in subsequent years.

Federated’s Bridal Group and Lord & Taylor divisions, which the company intends to divest, are being treated as discontinued operations. They are excluded from sales and earnings guidance.

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FINANCE

Coach Earnings Soar

BY CSA STAFF

New York City, Based on its strong second-quarter results, Coach Inc. is hotter than ever. For the three months ended Dec. 31, net income jumped 37.2% to $174.2 million or 45 cents a diluted share, from $126.9 million, or 32 cents a diluted share, in the year-ago quarter. Sales rose 22.3% to $650.3 million from $531.8 million. Same-store retail sales increased 19.9% (with regular-priced same-store sales up 12.8%, and factory-outlet units up 30.2%).

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News

OfficeMax Adds Details to Plan

BY CSA STAFF

Itasca, Ill., OfficeMax’s major turnaround plan will cost about $100 million, the company said. OfficeMax intends to reverse losses and boost sales by focusing on three key areas: cutting costs, improving corporate infrastructure and turning around its retail and contract businesses. As previously announced, the plan includes shuttering 110 stores.

“This is a close to $10 billion company,” CFO Don Civgin said on a conference call. “The turnaround will take time, but we are confident that 2006 will show significant progress towards our intermediate-term goal.”

The company reported a net loss of $3.9 million in the third quarter ended Sept. 24.

The company’s retail initiatives include implementing merchandising strategies intended to expand the company’s small business customer base, growing Print and Document Services, driving incremental sales from the OfficeMax ink refill program, and improving category management. In retail, the company will also pursue cost-savings initiatives from store labor and management programs, as well as advertising and marketing-cost efficiencies.

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