Federated Department Stores, Inc. today reported net income of $89 million for the first quarter of 2000, up 2.0 percent from net income of $87 million for the first 13 weeks of last year. Diluted earnings per share were 41 cents for the first quarter of 2000, compared to 40 cents for the first quarter of 1999.

James M. Zimmerman, Federated's chairman and chief executive officer, said the company is pleased with its first quarter performance, which exceeded expectations. "We were especially happy with the 13 percent increase we experienced in operating income, which was driven by a strong performance in our department stores," Zimmerman said. Addressing the direct-to-customer segment, Zimmerman noted that this year's results reflect Fingerhut's inclusion in the full quarter compared to just one month following its March acquisition by Federated last year, as well as increased e-commerce spending.

Operating Income

Operating income in the first quarter of 2000 was $253 million or 6.3 percent of sales, a 13 percent increase over operating income of $225 million or 6.2 percent of sales for the first quarter of 1999.

Sales

Sales for the first quarter of 2000 totaled $4.032 billion, an increase of 12 percent over total sales of $3.600 billion in the same period last year. Department store sales increased from $3.437 billion in the first 13 weeks of 1999 to $3.541 billion in the same period this year. On a comparable-store basis, sales for the quarter increased 2.9 percent. Direct-to-customer sales increased from $163 million last year to $491 million in the first quarter this year. E-commerce sales in the quarter were $28 million, compared to $5 million in the same period last year.

Forward-looking statements contained in this release involve risks and uncertainties that could cause actual results to differ materially from those contemplated by those statements. Factors that could cause such differences include the risks associated with retailing generally, transactional effects and other investment considerations described from time to time by the company in its filings with the Securities and Exchange Commission.

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 $17.7 billion. Federated currently operates more than 400 department stores in 33 states under the names of Bloomingdale's, The Bon Marche, Burdines, Goldsmith's, Lazarus, Macy's, Rich's and Stern's. Federated also operates the Fingerhut, Bloomingdale's By Mail, bloomingdales.com, Macy's By Mail and macys.com direct-to-customer catalog and electronic commerce subsidiaries.

(NOTE: Information on Federated and its operating divisions is available on the Internet at www.federated-fds.com. Copies of past press releases and corporate background data also are available by calling Fax-On-Demand at 1-800-853-9150.)

FEDERATED DEPARTMENT STORES, INC.

Consolidated Statements of Income (Unaudited) (Note 1)
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(All amounts in millions, except percentages and per share figures)

13 Weeks Ended
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April 29, May 1,
2000 1999
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Net Sales $ 4,032 $ 3,600
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Cost of Sales (Note 2) 2,395 2,174

Percent to sales 59.4% 60.4%

Selling, general and administrative expenses 1,384 1,201

Percent to sales 34.3% 33.4%
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Operating Income 253 225

Percent to sales 6.3% 6.2%

Interest expense - net (99) (75)
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Income Before Income Taxes 154 150

Federal, state and local income tax expense (65) (63)
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Net Income $ 89 $ 87
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Basic Earnings per Share (Note 3) $ .42 $ .42
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Diluted Earnings per Share (Note 3) $ .41 $ .40
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Notes:

(1) Because of the seasonal nature of the retail business, the
results for the 13 weeks ended April 29, 2000 and May 1, 1999
(which do not include the Christmas season) are not indicative of
the results for the year. Certain reclassifications were made to
prior period amounts to conform with the classifications of such
amounts for the most recent period.

(2) Substantially all department store merchandise inventories are
valued by the retail method and stated on the LIFO (last-in,
first-out) basis, which is generally lower than market.
Application of this method did not impact cost of sales for the
13 weeks ended April 29, 2000 or May 1, 1999. Direct-to-customer
merchandise inventories are stated at the lower of FIFO
(first-in, first-out) cost or market.

(3) Common shares outstanding used in computing basic earnings per
share were 212.8 million and 209.0 million for the 13 weeks ended
April 29, 2000 and May 1, 1999, respectively. Potential common
shares used in computing diluted earnings per share were 216.3
million and 216.4 million for the 13 weeks ended April 29, 2000
and May 1, 1999, respectively.


FEDERATED DEPARTMENT STORES, INC.

Operating Segment Data (Unaudited)
---------------------------------

(millions)
13 Weeks Ended
--------------------
April 29, May 1,
2000 1999
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Net Sales

Department Stores $ 3,541 $ 3,437

Direct-to-Customer 491 163
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Total $ 4,032 $ 3,600
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Operating income

Department Stores $ 308 $ 273

Direct-to-Customer (23) (2)
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Total segment operating income 285 271

Corporate and other (Note 1) (32) (46)
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Operating income $ 253 $ 225
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Depreciation and amortization expense

Department Stores $ 149 $ 153

Direct-to-Customer 12 3

Corporate and other (Note 1) 24 17
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Total $ 185 $ 173
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Note:

(1) Corporate and other consists of the income or expense associated
with the corporate office and certain items managed on a
company-wide basis (e.g., intangibles, financial instruments,
investments, retirement benefits and properties held for sale or
disposition).


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