Lower markdowns and lower inventories helped Federated Department Stores Inc achieve a 190 per cent increase in third quarter income to $75 million, nearly three times the $26 million reported in the same period last year.

Diluted earnings per share from continuing operations were 38 cents compared to 20 cents a share last year. Third-quarter sales of $3.479 billion were flat with sales of $3.475 billion last year. On a same-store basis, Federated's third quarter sales were down 2.0 per cent.

For the year to date, Federated's diluted earnings per share are $1.48, up from $1.13 a share last year, excluding restructuring charges. The company's nine-month income from continuing operations was $297 million, an increase of 43 per cent over the $208 million recorded in 2001.

For the first 39 weeks of 2002, Federated's operating income totalled $709 million or 6.8 per cent of sales. This compares to operating income of $517 million or 4.9 per cent of sales for the same period last year. Net income for the 2002 year to date was $477 million, compared to $171 million in the same period last year.

James M Zimmerman, Federated's chairman and chief executive officer, confirmed the company's earnings expectations from continuing operations are $1.95-2.05 a share for the fourth quarter, and $3.3 -3.45 a share for the full year of fiscal 2002, which ends 1 February 2003.