Wall St. More Interested in Takeover Battle : Federated Profit Up 8.8% for Year

Takeover target Federated Department Stores, owner of Ralphs supermarkets and Bullock’s department stores, Tuesday reported that its profit grew about 8.8% to $313 million in fiscal 1987.

“It wasn’t anything fantastic but they did not do too badly, given the (competitive) conditions that existed,” said retail analyst Pavlos Alexandrakis at Argus Research, a securities research firm. “All the retailers came in weak because everybody was forced into markdowns during Christmas.”

But news of Federated’s earnings took a back seat to the takeover battle being waged for the Cincinnati-based retail giant. Legendary retailer R. H. Macy & Co. and Canadian developer Campeau Corp. are bidding for Federated.

“Nobody is really focusing on Federated’s earnings,” Alexandrakis said. “We don’t even know what parts of the company will survive in the long term.”

Wall Street is waiting for a New York federal judge to deliver a critical ruling--maybe as early as today--on claims made by both Macy’s and Campeau.

Macy’s--which has the backing of Federated’s board--seeks to extend the deadline of Campeau’s offering.

Campeau claims that Federated’s takeover defense is illegal.

“People are just waiting to see what is going to come out of court,” said one Wall Street arbitrager.

Campeau announced that, as of Monday, it had received 2.4 million Federated shares.

That amounts to less than 4% of 70.5 million Federated shares Campeau wants to buy. Analysts speculated that Federated shareholders are awaiting the outcome of the court hearing before selling their shares.

In its earnings report, Federated said that during 1987 its results were helped by a lower tax rate. In contrast, 1986 figures were hurt by a one-time loss. If the loss is excluded, 1987 earnings increased only 3.7%.

During the crucial fourth quarter--when Christmas sales take place--Federated reported earnings of $177 million--a 3.3% increase.

Annual sales for Federated--which also owns Bloomingdale’s, Abraham & Straus and Filene’s department store chains--rose 5.8% to $11.1 billion. Fourth-quarter sales reached $3.6 billion, a 3.2% increase.