Federated Department Stores Inc. (FD), owner of such nameplates as Bloomingdale's (search) and Macy's, said Wednesday its earnings nearly doubled in its second quarter, and the company sees sales growth picking up in the second half of the year.

Net income for the quarter that ended July 30 rose to $148 million, or 84 cents per share, from $78 million, or 43 cents per share, a year ago when the company took a $59 million charge, or 20 cents a share, to buy back $274 million of long-term debt.

The second-quarter 2005 numbers were in line with analysts' profit expectations, according to a Thomson Financial survey.

Sales of $3.62 billion were up 1.2 percent over sales of $3.58 billion last year. Sales at stores opened at least a year, considered a key indicator of a retailer's health, were up 1.1 percent.

Looking ahead, Federated said it expects same-store sales increases of about 3 percent in each of the third and fourth quarters. The company said its sales growth should pick up as it continues to make changes aimed at improving product assortments, pricing, the shopping experience and marketing.

The upbeat news drove Federated shares up 2 percent, or $1.48 per share, to $74.24 on the New York Stock Exchange (search).

The company doesn't plan to issue guidance on its third- or fourth-quarter earnings until after its acquisition of May Department Stores Co. (MAY) closes, which is expected to occur in the third quarter.

Cincinnati-based Federated announced in February that it is buying its St. Louis-based rival to create a retail force with nearly 1,000 department stores and $30 billion in annual sales. Federated owns more than 450 stores under such names as Bloomingdale's and Macy's, while May has about 490 department stores operating under names including Famous-Barr (search), Filene's and Lord & Taylor (search). May also owns more than 700 bridal and formal wear stores.

Terry Lundgren, Federated's chairman, president and chief executive, said the merger and also the pending sale of Federated's credit card business to Citigroup represent the beginning of new era for the company and a period of positive long-term change.

For the first half of the year, Federated earned $271 million, or $1.56 per share, compared with $175 million, or 96 cents per share, in the year-ago period.

Sales reached $7.26 billion, compared with $7.13 billion a year ago.