MELVILLE QUARTER NET OFF 10.4%

Byline: Valerie Seckler

NEW YORK--Melville Corp. reported Thursday that earnings for the fourth quarter fell 10.4 percent, reflecting a steep decline in profits at Wilsons and lackluster profit growth at Marshall's, which generates about a third of the company's operating income.
Net income for the quarter ended Dec. 31 totaled $212.7 million or $1.97 per share, down 10.4 percent from $237.4 million or $2.22. Wall Street's mean estimate for the quarter was $2.08.
Sales increased 4.3 percent to $3.7 billion from $3.5 billion. Same-store sales gained 3.5 percent. Adjusting the 1994 figures to include the six selling days absent from the most recent quarter, sales would have grown by 9.2 percent.
"Wilsons was the weakest performing division, year-over-year, exacerbated by warm weather that depressed outerwear sales, and leather apparel wasn't the hot fashion," Robert D. Huth, chief financial officer, said in an interview.
Marshall's realized a "slight increase" in sales and earnings for the quarter, Huth said.
For the year, Marshalls sales advanced 6.5 percent but operating income fell "a little less than 10 percent," Huth said.
In a related development, Standard & Poor's said it lowered its ratings on Melville's senior debt to Single-A-Plus from Double-A-Minus, and on commercial paper to A-1 from A-1-Plus.
S&P based the downgrade on "the continuing negative trend in Melville's operating performance and the timing and magnitude of a turnaround. Melville's off-price apparel retail format, Marshalls, continues to falter as weak demand has led to intensified competition among apparel retailers. S&P believes the repositioning of this chain will be crucial to the company's recovery."
Huth said the off-price chain continues to add in-season apparel, home furnishings and gift items in an effort to boost its productivity and leverage its costs.
Marshalls ended 1994 with more than 450 units against 448 in 1993. Plans call for opening 35 Marshalls in 1995.
Melville's earnings in the year fell 7.3 percent to $307.5 million or $2.75 per share, from $331.8 million or $3. Sales increased 8.1 percent to $11.3 billion from $10.4 billion.
-- Fairchild News Service

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