Company News: Federated hurt by weak Macy’s sales

Federated Department Stores Inc. said Wednesday it swung to first-quarter profit, but adjusted earnings missed Wall Street estimates as sales at newly converted Macy’s stores remained weak.

The company earned $36 million, or 8 cents per share, in the quarter ended May 5, compared with a year-ago loss of $52 million, or 9 cents per share, hurt by a hefty charge.

Excluding costs associated with the company’s integration of May Department Stores Co., which it acquired in 2005, earnings rose to 16 cents per share from 1 cent per share last year. Analysts had forecast a profit of 19 cents per share.

Sales slipped 0.1 percent to $5.92 billion from $5.93 billion last year, missing estimates for $5.99 billion. Last week the company announced sales at stores opened at least a year — considered a key indicator of a retailer’s success — rose by 0.6 percent.

Federated, which also operates the Bloomingdales’ chain, took a charge of $22 million, or 5 cents per share, to cover costs of converting regional department stores gained in the May acquisition to its flagship Macy’s brand.

“Sales in the new Macy’s locations were disappointing in the quarter,” CEO Terry Lundgren said in a statement.

“Hewlett-Packard Co.’s second-quarter profit fell 7 percent despite a dramatic rise in sales of personal computers and servers, narrowly beating Wall Street’s forecast.

For the three months ended April 30, HP earned $1.78 billion, or 65 cents per share, compared with $1.90 billion, or 66 cents per share, in the same period last year.

The latest quarter’s results were weighed down by restructuring and other one-time expenses amounting to 5 cents per share. Last year’s second-quarter results were boosted by a tax settlement gain of 15 cents per share.

Sales in the quarter leaped to $25.53 billion, a 13 percent increase from the $22.55 billion HP rang up in the same quarter last year.

“Northwest Airlines cleared a major hurdle to its reorganization Wednesday when a judge approved a settlement between the airline and some of its shareholders during the last hearing on the airline’s bankruptcy process.

U.S. Bankruptcy Judge Allan Gropper approved the settlement that Northwest reached Friday with a group of investors. The investors claimed the airline was holding off a merger until after it emerged from Chapter 11 bankruptcy protection.

The investors claimed that waiting to merge would eliminate the potential value that current shares could have.