By Randy Tucker
Enquirer staff writer

Federated Department Stores on Wednesday delivered disappointing second-quarter earnings, dragged down by a one-time charge of $59 million related to the company's repurchase of $273 million of its long-term debt.

The Cincinnati-based parent of Bloomingdale's, Macy's and Lazarus-Macy's posted earnings of $78 million, or 43 cents a share for the quarter, compared with $120 million, or 64 cents a share, in the same period a year ago.

Analysts on average expected 46 cents per share.

But Federated said its profits would have been 63 cents a share without the charge - slightly ahead of the company's prior guidance of 57 cents to 62 cents a share.

Despite the setback, Federated officials said they're confident that second-half sales will meet expectations of 1.5 percent to 3 percent growth, and the company has even raised profit forecasts for the full year by 10 cents to $3.70 to $3.80 a share.

Federated shares closed Wednesday down $1.52, about 3 percent, at $44.50.

"We're feeling good about the fall fashion," Karen Hoguet, Federated's chief financial officer, said in conference call with analysts. "We think the customer will continue to perform well."

Total sales in the second quarter rose 3.3 percent to $3.5 billion from $3.4 billion last year.

Sales at stores open at least a year also rose 3.3 percent.

One analyst said he sees little reason for concern.

"Outside of the debt retirement, Federated's second-quarter results also reflected a number of one-time items related to the centralization of its Home Store business and store closings," said Jeff Stinson, who follows Federated for Midwest Research.

"If you strip those things out and look at the core fundmentals of the business, it was a very good quarter for them." E-mail rtucker@enquirer.com