May Profits Tumble Over Fields Purchase
Thomas Russell -- Furniture Today, November 15, 2004
The combined hits from the integration of the Marshall Field's department stores and costs from store divestitures depressed May Department Store Company's earnings for the quarter just ended. The company posted third-quarter net income of $8 million, off 83 percent from third-quarter earnings last year.
A 17 percent increase in selling, general and administrative expenses brought about a 16 percent decline in the company's operating profit for the quarter, which totaled $132 million.
The company said the Marshall Field's acquisition, which was completed in July, and the integration of that operation trimmed 6 cents a share off the company's third-quarter net profit. The deal brought 62 Marshall Field's stores into the May Company fold, plus the real estate associated with nine Mervyn's stores in the Twin Cities area. With the completion of the purchase, May Company numbered close to 500 department stores.
The company's third-quarter sales rose 17 percent to nearly $3.5 billion. “Must-haves” drove the sales increase, in particular earrings, brooches, status handbags, ponchos, wraps and fashion cold-weather items. “Customers continued to respond to tailored looks,” the company said, referring to sales increases in ladies' suits, tailored sportswear, dress shoes, men's designer dress shirts, neckwear and suit separates.
Still, the company pronounced the quarter “disappointing” in terms of overall sales; same-store sales declined by more than 3 percent for the quarter. Apparel and home-furnishings items registered poor sales performances.
For the first nine months of the year, May Company reported net income of $185 million, compared with just $9 million for the first three quarters of 2003. Operating income rose by more than 10 percent to $582 million, and sales climbed by more than 6 percent to $9.4 billion.
May Department Stores
|Qtr 10/30 (x1000)||2004||2003||% chg|
|Earnings per share||0.02||0.15||-86.7|
|Average gross margin||27.6%||27.4%||--|
|Earnings per share||0.59||-0.01||NA|
|Average gross margin||28.6%||28.1%||--|
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