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Federated Says Profit Rose 5% On Stronger Sales

Federated Department Stores, parent of Macy's and Bloomingdale's, said stronger sales at established stores and lower costs drove a 5% rise in fourth-quarter earnings.

Separately, the company said it will ask shareholders to approve a corporate name change to Macy's Group. The company also announced a $4 billion increase to its stock buyback program and said it will immediately repurchase 45 million shares for $2 billion under the plan.

For the quarter ended Feb. 3, net income rose to $733 million, or $1.40 per share, from $699 million, or $1.26 per share, in the prior-year period.

Stripping out costs related to the integration of the stores acquired in the 2005 acquisition of May Department Stores, Federated said earnings for the latest quarter were $1.66 per share, topping the company's estimate of $1.55 to $1.60 per share issued about three weeks ago. That figure includes a gain of 6 cents per share.

Analysts polled by Thomson Financial were expecting earnings of $1.58 per share. Analysts typically exclude one-time charges and gains from their estimates.

Sales fell 4% to $9.16 billion from $9.57 billion, as the company shuttered 80 "duplicative" store locations.

Analysts forecast fourth-quarter sales of $9.07 billion. The recent quarter included an extra week of sales--14 weeks versus 13 weeks a year ago.

Same-store sales, or sales at stores open at least one year, rose 6.1% in the quarter. Same-store sales are a closely watched measure of performance in the retail industry.

Over the quarter, Federated lowered its selling, general and administrative costs 11% to $2.31 billion.

Federated has been reorganizing since acquiring rival May in August 2005. In the past five months, the company has shed its Lord & Taylor division, David's Bridal and Priscilla of Boston brands. The company said about 90 percent of its sales now involve the Macy's brand.

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