NEW YORK — May Department Stores Co. fell short of Wall Street’s estimate in the first quarter, but its balance sheet revealed the company is well-positioned to make a bid for Marshall Field’s.
For the three months ended May 1, the St. Louis-based operator of the Lord & Taylor and Filene’s nameplates, among others, said net income grew 5.6 percent to $76 million, or 24 cents a diluted share, from $72 million, or 23 cents, a year ago.
Excluding store divestiture costs — a computation analysts had accounted for — earnings were 26 cents, which missed their forecast by a penny.
Net sales for the period increased 3.1 percent to $2.96 billion from $2.87 billion a year ago, and comparable-store sales improved 1.7 percent. Excluding stores to be divested, comps would have advanced 2.5 percent, May said in a statement.
Overshadowing the tepid operating results was a balance sheet in fighting trim for an acquisition of Target Corp.’s Marshall Field’s stores. Since last year, May has added muscle by hoarding an additional $360 million in cash and cash equivalents, which now stand at $438 million. Moreover, the company has become leaner by deleveraging itself of $275 million in current liabilities and $148 million in long-term debt.
Target opened the bidding on the venerable 62-door department store chain Monday, and given a potential bidding war between May and archrival Federated Department Stores Co., Field’s could go for more than $2 billion, analysts said. For May, which has not confirmed interest in bidding for Field’s, the acquisition would narrow the size discrepancy with Federated — May lags Federated by about $2 billion in annual sales — and also make the company more upscale, something May has been trying to do. May most likely would try to maximize the Field’s name by leveraging its better brand assortment to help elevate other divisions.
Turning back to first-quarter results, May said color and tailored looks drove sales of women’s and junior apparel. Growth in tailored women’s sportswear separates and suits was led by new stylings and offerings of jackets and skirts. Sales of women’s accessories were particularly robust, as handbags and small leather goods remained “the must-have accessory,” and costume jewelry, sunglasses, headwear and hair accessories all did brisk business.
Although footwear and men’s apparel also performed well, May said dresses, children’s apparel and home furnishings lagged other merchandise categories.