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May Looking to New Format

The St. Louis-based department store operator, for decades known for its cookie-cutter rollouts and heavily matrixed merchandising, unveiled Friday a prototype strategy for building smaller department stores that emphasize casual styles to reach a...

The St. Louis-based department store operator, for decades known for its cookie-cutter rollouts and heavily matrixed merchandising, unveiled Friday a prototype strategy for building smaller department stores that emphasize casual styles to reach a broader consumer base, especially younger shoppers, easier shopping and centralized checkouts. It’s also a strategy to perk up anemic sales and score points with Wall Street.

At the $14 billion retailer’s annual shareholders’ meeting here at the St. Regis Hotel near downtown, chairman and chief executive officer Gene Kahn said the company will open between eight and 12 new-format stores over the next 30 months that redefine May Co.’s traditional big-box of mid-tier department store merchandising. According to Kahn, the prototypes will offer streamlined fashion assortments that play up hot casual trends in an “uncluttered, more compelling” environment for faster shopping.

The 140,000-square-foot prototype will debut on Oct. 4 under the Robinsons-May banner at the Irvine Spectrum shopping center in Irvine, Calif., followed by a Hecht’s unit in Windoor, N.C. on Oct. 16 and a Filene’s model on Oct. 23 in Leominster, Mass., near Boston. The remaining test stores will each be operated by a different May Co. division, depending on its locale. Most May stores range from about 170,000 to as much as 300,000 square feet.

Kahn cited May’s lackluster sales in 2001 and outlined an aggressive five-point plan that he believes will restore the luster to the 93 year-old retailer. May’s net retail earnings fell 1.1 percent last year to $14.2 billion, while earnings per share were $2.22.

“There are no excuses for last year’s sales and earnings results,” said Kahn. “Our performance is not what we expect, and not what the entire May organization expects. Clearly, we are not satisfied. We are staunchly dedicated and intensely focused on achieving our sales and earnings objectives going forward.”

Kahn said that improved merchandising is May’s top priority and is supported by five initiatives:

More casual, lifestyle-driven assortments across the board, from fashion, accessories and shoes to home furnishings

Tailoring fashion assortments to younger customers, especially teens, tweens and those up to 44 years old.

Reducing the number of styles and getting rid of clutter.

Making shopping easier and more compelling with express checkouts in some stores, trendier displays chainwide that provide guidance on putting together outfits, and stoke multiple sales.

Strengthening the gift category, including wedding registries and Internet gift sites.

In eight test stores, May will be introducing express checkouts to gauge the right balance between quick checkout and the more traditional customer service model. In other tests at certain locations, May will provide mesh shopping bags and experiment with shopping carts.

Kahn has in the past couple of years stepped up private label development, and called it a great way to offer fashion at a value price and a proprietary product. May’s prime competitor, Federated Department Stores, has a more advanced and successful private label program, and Federated for the last couple of years has introduced smaller and more specialized units in a handful of locations.

However, Kahn said new design teams are working with May merchants to introduce several new private label programs this year in department stores and the Lord & Taylor specialty division. As reported, L&T is undergoing a four-year makeover emphasizing the bridge and better price zones and to differentiate further from the competition and May’s other divisions. May is launching proprietary apparel labels called Be, I.E., and I.E. Relaxed this fall and updating the established Valerie Stevens label. Last year, L&T introduced several edgy private brands, including Identity and Kate Hill for women and Grant Thomas and Metropolitan for men. The brands have done well to date, said Kahn.

He said women’s apparel continues to be soft as does men’s apparel, while home and women’s accessories have been relatively strong.

May opened 22 department stores in 2001, including five Lord & Taylor units, seven Hecht’s stores, seven Foley’s and one store each for Robinsons-May, Kaufmann’s and Famous-Barr. The company expanded in several new markets last year including Tennessee, Florida, Ohio and Louisiana. Earlier this month, May said that four of its divisions are consolidating into two: Kaufmann’s is merging into Filene’s, while Meier and Frank are folding into Robinsons-May. As reported, no name changes are planned, and the company expects to save about $60 million pre-tax annually. The company plans to open 11 stores totaling 1.7 million square feet this year and remodel 31 stores totaling 2.7 million square feet. David’s Bridal plans to add 30 stores in 2002.

The 436-unit May has stores in 44 states, the District of Columbia and Puerto Rico. The stores are under the names of Lord & Taylor, Hecht’s, Strawbridge’s, Foley’s, Robinson-May, Filene’s, Kaufmann’s, Famous-Barr, L.S. Ayres, The Jones Store and Meier & Frank. May also operates 156 David’s Bridal stores, 240 After Hours Formalwear stores and 10 Priscilla of Boston stores, and formed a marketing alliance this spring with The Knot, an Internet wedding planning resource, to further bolster May’s bridal business.

The five year program calls for 62 new department stores and at least 150 David’s Bridal stores, with a $4.1 billion for capital improvements — $1.6 billion for new stores, $1.2 billion for expansions and remodels and $370 million for systems and operations.