NEW YORK — The earnings and same-store sales declines continued at May Department Stores last year, while expenses and interest costs, largely related to Marshall Field’s, were on the rise.
However, to fight the erosion, May officials on a conference call Thursday cited five major merchandise initiatives: deliver newness and fashion faster; trade broadly with core businesses and core vendors to stem losses in the moderate sector while aggressively pursuing younger and better segments; grow proprietary labels to 20 percent of total volume in five years; grow gift offerings, and simplify shopping by eliminating duplicative product and stressing key items.
May is seeking “very slight” comparable-store gains this spring. Around April, the board will consider selling the company’s credit card operation.
Two big questions loom at the St. Louis-based May: Will the company be sold off, in light of reported talks with Federated Department Stores and other parties, and who will be the retailer’s next chief executive officer, after the departure of Gene Kahn on Jan. 14?
Officials shed little light on those situations, though John Dunham, president and acting chairman and ceo, said the search will “lean towards the merchant’s side of the business, and beyond that I really can’t give you any more details.” May’s problems are seen as merchandise and leadership related.
Fourth quarter net earnings were $339 million, or $1.10 per share, versus $425 million or $1.38 a year ago. May’s stock closed at $30.78 on the New York Stock Exchange Thursday, dropping 73 cents, or 2.32 percent, on heavy trading.
The quarter’s results included store divestiture costs of $25 million, or 5 cents per share. Excluding those costs, earnings were $356 million, or $1.15. The quarter also includes a $42 million, or 9 cents per share, charge for lease accounting, $36 million of which corrects prior years. Fourth quarter 2003 earnings also included store divestiture costs.
Marshall Field’s, acquired for $3.2 billion last year, contributed 5 cents to fourth quarter earnings, including integration costs of 2 cents. Officials said the Field’s integration is proceeding on schedule without any surprises, and that it should be completed by April, with the expected $85 million in synergies achieved. May’s cash flow remains strong at more than $1.3 billion in 2004, enabling the pay down of short and long-term debt, much of which is associated with Field’s.
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