Federated Department Stores Inc. and Dayton Hudson Corp. both cruised past analyst earnings' expectations on Tuesday as the retailer giants generated a strong surge in sales.
Federated (FD) - the owner of Bloomingdale's, Macy's, Burdines and Stern's - reaped earnings of $408 million, or $1.88 a share, in the fourth quarter, compared with the $379 million, or $1.66, earned in the same period a year earlier. Analysts surveyed by First Call expected the company to earn $1.82.
Federated said its same-store sales grew 4.1 percent in the fourth quarter. Total sales rose 2.9 percent to $5.2 billion from $5.1 billion.
Investors seemed pleased with the results, sending shares up 1 15/16 to 41 1/4, a 5 percent gain.
"We were particularly pleased with our very strong performance in the important fourth quarter, including both sales and gross margin," said chief executive James M. Zimmerman in a statement. "Improving our fourth quarter performance was a key priority for us in 1998."
Zimmerman also said good inventory management and continued expense reductions factored in the company's solid earnings.
Dayton Hudson (DH), the operator of Target and Mervyn's, had earnings from operations, excluding unusual items, of $453 million, or 97 cents a share, in the fourth quarter, compared with the $356 million, or 76 cents, earned in the year-earlier same quarter. Analysts surveyed by First Call expected the company to earn 90 cents.
The fourth quarter included an extraordinary charge from purchase and redemption of debt of $24 million.
Total comparable-store sales rose 6.1 percent, the company said. Target led the way with same-store sales climbing 6.8 percent, followed by Mervyn's with a 4.4 percent rise.
"We are entering fiscal 1999 with good momentum and believe we are poised to deliver another year of continued growth in sales and earnings," said Dayton Hudson chief executive Bob Ulrich in a statement.
Shares of the department store operator rose 1 5/8 to 65 3/4.
Written By Lisa J Ulmer, CBS MarketWatch