NEW YORK — Softness continued at The May Department Stores Co.
The St. Louis-based department store operator reported Tuesday that its comparable-store sales for November backtracked 7.9 percent. Last November, the firm’s comps fell 0.6 percent.
Total sales for the parent of Lord & Taylor and Hecht’s slid 5.1 percent during the four weeks ended Nov. 30 to $1.3 billion from $1.37 billion.
Shares of the firm dipped 96 cents, or 3.9 percent, to end Tuesday at $23.88 on the New York Stock Exchange.
May Co. hasn’t had a positive monthly comp since April. Most other retailers report comps on Thursday.
Despite the November drop, sales weren’t as bad as some predicted. Merrill Lynch analyst Stacy Turnof was looking for between an 8 and 10 percent retreat. "Comps were slightly above plan, particularly in the last three days [of November]," she noted.
The three-day period, including Thanksgiving Day, Black Friday and Saturday, accounted for approximately 25 percent of the month’s sales, said the firm.
May Co. isn’t altering its strategy for December and will carry out its normal promotions, said Turnof, who expects comps to show a percentage drop in the low-single digits for the Christmas month.
"It’s a tough sector right now," she said. "We’re forecasting for it to be a poor Christmas selling season." The consumer is being bombarded by a weak stock market, higher oil prices, slow unemployment growth and worries of a possible war with Iraq, she noted.
Salomon Smith Barney analyst Deborah Weinswig, in research notes, added: "Over the past year, May has been faced with weak top-line trends and, as a result, has been focused on stimulating sales growth and operating margins through various strategic initiatives."
Among them is the firm’s effort to develop "true proprietary brands," Weinswig said. "Private label allows the company to differentiate its product offering from other department stores and give the customer a reason to make May a destination."
The firm’s proprietary brands should exceed 21 percent of sales in their respective merchandise categories this year and should represent 25 percent by 2005, said Weinswig.As reported, May Co. in August premiered two new brands, named i.e. and be. The be label, which targets 19- to 30-year-old women, hit a snag when May Co. was enjoined from using the name after a trademark infringement lawsuit was filed by Bebe Stores. May Co. is appealing the decision and a hearing is set for Tuesday.
Weinswig expects the firm will ultimately change the name, but keep the merchandising the same. The i.e. label targets 31- to 44-year-old women.
Other initiatives singled out by the analyst included a strengthened focus on casual merchandise, a stronger value message, more differentiated merchandise presentations, faster checkouts and, as part of an appeal to younger customers, the acquisition of David’s Bridal and other entities in the matrimonial market.
For the third quarter ended Nov. 2, May Co.’s net profits plunged 69.2 percent to $16 million, or 5 cents a diluted share. After excluding special items, earnings were still off 49.1 percent to $28 million, or 9 cents. Revenues for the 13 weeks slid 4.7 percent to $3.05 billion.
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