May's Income Drops

ST. LOUIS-As it nears its $11 billion merger into Federated Department Stores, May Department Stores posted a Q1 earnings drop of $35 million from the same year-ago period. May executives said yesterday that they expect the Federated acquisition to close some time in the third quarter.

During its Q1, which ended April 30, net earnings were $41 million compared to $76 million last year. Year-over-year same-store sales fell 5.1%. “This result was disappointing and below our planned expectation,” said Thomas Fingleton, the company’s EVP and CFO, during a conference call.

Men’s and women’s apparel were cited as the weakest sales categories; the company also took markdowns to keep inventories current. Net sales for the quarter were nearly $3.4 billion, up 13.7% from the same period last year.

May opened one department store in its Q1, a Robinsons-May in El Centro, CA. Seven more are planned for the year, three Foley’s, two Kauffman’s, another Robinsons-May and a Hecht’s. The company currently operates 490 department stores under those chains, as well as Famous-Barr, Filene’s, Lord & Taylor, L.S. Ayres, Marshall Field’s, Meier & Frank, Strawbridge’s and the Jones Store. The retailer closed two Lord & Taylors in its Q1 and plan five more closures by year-end, to complete a 2003 plan to divest 32 of those units.

Upon completion of the Federated-May merger, the company will be controlled by Federated management and operate just over 950 department stores across the country. May also owns 41 David’s Bridal stores, 450 After Hours Formalwear stores, and 11 Priscilla of Boston stores in its Bridal Group.