NEW YORK — In yet another disappointing showing, May Department Stores Co. on Tuesday said net earnings for the first quarter declined by 46 percent to $41 million, compared with $76 million in the same period of 2004.

On a per-share basis, for the 13 weeks ended April 30, earnings were 13 cents, compared with 24 cents in the same period last year.

The latest quarter’s earnings include store divestiture costs of 2 cents per share. Excluding these costs, earnings were 15 cents per share.

Total sales for the 2005 first quarter were $3.37 billion, an increase of 13.7 percent compared with $2.96 billion in the year-ago quarter. But comparable-store sales dropped 5.1 percent.

“Our 2005 first-quarter results did not meet our expectations,” John Dunham, May’s chairman, president and chief executive officer, said in a statement. “Sales of our proprietary ladies’ and men’s apparel brands were among our weakest-performing categories, and during the quarter we took incremental markdowns to keep our proprietary apparel inventories current.”

May has been on a downward slide for five years. Its loss of market share and declining earnings and stock price were big factors in making the retailer vulnerable to Federated Department Stores’ $17 billion takeover. A merger agreement was announced in February. The deal is expected to close in the third quarter.

The first quarter includes the benefit of a $14 million, or 5 cents-per-share, income tax provision reduction from the resolution of various federal and state income tax issues. First quarter 2004 earnings included store divestiture costs of $7 million, or 2 cents per share.

May said its integration of Marshall Field’s “continues on track and all system conversions were completed in April 2005.” First quarter 2005 earnings include Marshall Field’s start-up integration expenses of $21 million, or 5 cents per share. May bought Field’s from Target Corp. last year for $3.24 billion.

First-quarter 2005 results include incremental markdowns of approximately $18 million at cost, or 4 cents per share, to facilitate the seasonal clearance of proprietary apparel.

All of May’s 490 department stores, including Famous-Barr, Filene’s, Foley’s, Hecht’s, Kaufmann’s, Lord & Taylor and Marshall Field’s, are expected to eventually be converted to Federated’s Macy and Bloomingdale’s. However, there is a movement among groups in Chicago to attempt to block May from converting the Marshall Field’s flagship on State Street to a Macy’s.

This story first appeared in the May 11, 2005 issue of WWD. Subscribe Today.

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