CINCINNATI, Feb. 27 -- Federated Department Stores, parent of Macy's and Bloomingdale's, said Tuesday that it was planning to change its name to Macy's Group as it builds a national department store brand. The retailer also said stronger sales at established stores and lower costs drove fourth-quarter earnings 5 percent higher.
Federated said it would ask shareholders to approve the name change. The company also announced a $4 billion increase to its stock buy-back program and said it would repurchase 45 million shares for $2 billion.
"Most customers don't know what Federated Department Stores stands for, and obviously the name-brand recognition for our new name is an easy decision for us," chief executive Terry J. Lundgren said in an interview. "We've thought about this for some time, but now that we've finished our merger this past year and 90 percent of our $27 billion annual revenues are coming from the Macy's brand, it just made a lot of sense to change the name of the corporation to Macy's Group Inc."
Lundgren said he was encouraged by progress in the former May stores, despite some reluctance by customers who are loyal to their former nameplates. He said sales at the those stores have been growing stronger every month.
"We would have preferred seeing the sales at the former May Co. stores perform better, particularly in the home furnishings category, and move faster than they in fact did," Lundgren said.
Federated has been reorganizing since acquiring rival May in August 2005. The May chain included Hecht's. In the past five months, Federated has shed its Lord & Taylor division, David's Bridal and Priscilla of Boston brands.
For the quarter ended Feb. 3, net income rose 4.9 percent, to $733 million from $699 million a year earlier. Excluding 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.
Sales at stores open at least one year, considered a key indicator of a retailer's success, rose 6.1 percent in the quarter.
Federated shares closed Tuesday at $43.35, down 85 cents. The stock has traded from $32.57 to $45.01 in the past year.