Federated Reports

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Remote Name: 216.57.26.250

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CINCINNATI, Jul 5, 2001 Federated Department Stores, Inc. today revised its earnings guidance for the second quarter and fiscal 2001. The company said that as a result of continued weak sales in its department store segment, second quarter earnings now are expected to be between 40-50 cents a share, excluding restructuring charges. This is down from an earlier forecast of 70-75 cents a share on the same basis.

The company said that while a majority of the earnings miss can be attributed to the shortfall in sales, it is also taking markdowns on existing inventory so that it will start the second half of the year in good shape. Federated expects inventories at the end of July to be at appropriate levels to ensure a fresh flow of merchandise throughout the fall season.

Federated said that in the wake of continued weak sales, it also is lowering its fall comparable-store sale expectations to minus 1-2 percent. Previously, the company plan projected comp-sales that were flat to up 1 percent for the fall season.

As a result of its lowered second quarter earnings guidance and the reduced fall sales plan, Federated said it is lowering its annual earnings estimate to between $3.60 and $3.90 a share from the previous estimate of $4.00 to $4.25 a share. The company noted, however, that earnings forecasts are particularly difficult in the current climate of economic uncertainty, and given that more than 70 percent of the company's profits are made in the second half of the year, a reversal in spring sales trends could improve the earnings forecast for the fall season.

Federated, with corporate offices in Cincinnati and New York, is one of the nation's leading department store retailers, with annual sales of more than $18.4 billion. Federated currently operates more than 430 department stores in 33 states and Puerto Rico under the names of Macy's, Bloomingdale's, The Bon Marche, Burdines, Goldsmith's, Lazarus and Rich's, as well as macys.com, bloomingdales.com and Bloomingdale's By Mail. Federated also operates the Fingerhut catalog and e-commerce subsidiary. Weekly sales updates are available by calling 513/579-7987, or on the Internet at www.federated-fds.com

(Note: This release contains certain forward-looking statements that reflect current views of the financial performance and future events of Federated. The words "expect," "plan," "think," "believe" and other similar expressions identify forward-looking statements. Any such forward-looking statements are subject to risks and uncertainties. Future results of the operations of Federated could differ materially from historical results or current expectations because of a variety of factors that affect the company, including transaction costs associated with the renovation, conversion and transitioning of company retail stores in regional markets; the outcome and timing of sales and leasing in conjunction with the disposition of company retail store properties; the retention, reintegration and transitioning of displaced company employees; competitive pressures from department and specialty stores, general merchandise stores, manufacturers' outlets, off-price and discount stores, and all other retail channels; and general consumer-spending levels, including the impact of the availability and level of consumer debt, and the effects of weather.)