Federated Department Stores Inc. on Thursday lowered it earnings outlook for fiscal 2001 citing the effects of the Sept. 11 attacks and the stalled U.S. economy. 

On Sept. 24 Federated, parent of Macy's and Bloomingdale's, reported that sales had fallen dramatically after the attacks and said it would cut its earnings estimates. 

Department stores, apparel chains and other high-end retailers have been hit hard by the slowing economy as consumers cut back on purchases of nonessential items like new clothing and jewelry. 

Other retailers that have warned on sales and profits include Neiman Marcus Group, Nordstrom Inc. and Tiffany & Co Inc. 

Cincinnati-based Federated now expects full-year 2001 earnings of $2.85 to $3 a share, before restructuring charges. 

It said third-quarter earnings are expected to be 13 cents to 20 cents a share, and fourth-quarter earnings are seen between $1.85 and $2 a share. 

Nineteen analysts polled by Thomson Financial/First Call, on average, forecast earnings of 18 cents a share for the third quarter, $1.89 for the fourth quarter, and $2.94 for the full year. 

In August, Federated said it expected to earn $3.60 to $3.80 a share in 2001, excluding charges. At that time, the retailer said it would earn 50 cents to 60 cents a share in the third quarter, and $2.20 to $2.35 in the fourth quarter. 

Federated said it expects sales at department stores open at least a year -- same-store sales -- to fall by 7 percent to 10 percent in both October and the fourth quarter as a whole. In September Federated's same-store sales fell 12.0 percent. 

The retailer said the sales declines will result in significant markdowns on merchandise, which will be booked in the third and fourth quarters. Federated also said it has slashed planned merchandise receipts for the fall season. 

One analyst said that Federated would have to drive its costs down, especially in its department stores, to accommodate the lower sales. 

``Certainly the biggest challenge for them is getting expense dollars down,'' Wayne Hood, retail analyst at Prudential Securities, said. ``Their cost structure is built around a much higher sales base. 

Hood also said he forecast Federated's full-year 2001 earnings at $2.72, which is below the company's forecast. 

Shares of Federated were off 4 cents at $29.97 in late morning trade on the New York Stock Exchange. Federated shares are down 6 percent since Sept. 11, underperforming the Standard & Poor's index of department stores, which is up 2 percent.