MAY CO. NET RISES 15.4% IN THE 4TH PERIOD
NEW YORK — Although margins were squeezed and inventory was up at yearend, May Department Stores Co.’s fourth-quarter earnings rose 15.4 percent to $418 million, or $1.61 a share.
May’s year-earlier earnings were $362 million, or $1.48, after a $31 million loss from discontinued operations.
“Our strong financial position and cash flow are significant assets in this challenging retail market, providing the necessary flexibility for physical growth and for investments to keep our facilities and systems up to date,” David C. Farrell, chairman and chief executive officer, said in a statement.
May Co. remains among the best-performing retailers in the nation. However, the latest figures indicate the chain was not immune to some of the difficulties that plagued the industry last year, including the disappointing Christmas season and roller coaster consumer spending patterns.
Jay J. Meltzer, managing director of LJR/Redbook Research, noted that May Co.’s performance was roughly in line with Wall Street expectations, and 2 cents ahead of his estimates.
He noted that gross margins were off slightly as the company struggled with excess inventory after the holidays. Meltzer added that many other retailers may face a similar problem, resulting from weaker-than-expected apparel sales during December. “Retailers had to compensate with increased markdowns, sales and closeouts during January,” he said. “And that hurt margins.”
Despite heavy sales at the end of the quarter, May Co.’s inventories, at $2.4 billion, were up 11.5 percent over last year, he added.
During the year, the chain completed the spinoff of PayLess ShoeSource Inc., allowing May to focus totally on department stores, Farrell said.
Sales for the three months ended Feb. 1 gained 10.4 percent to $4 billion from $3.63 billion. Same-store sales were up 4.4 percent.
The St. Louis-based May Co. increased its annual dividend to $1.20 from $1.16. It also plans to repurchase up to $300 million of its common stock. This follows a $600 million repurchase program of 12.7 million shares begun in August 1996 and completed last month.
May Co. stock dipped 1/2 to 40 3/4 on the New York Stock Exchange Wednesday.
For the year, earnings inched ahead 0.4 percent to $755 million, or $2.82, from $752 million, or $2.61. Income from continuing operations rose 7 percent to $749 million from $700 million. Income from discontinued operations fell to $11 million from $55 million in the prior year.
Sales were up 11.1 percent to $11.6 billion from $10.5 billion. Same-store sales were up 4.3 percent.
The company opened 28 department stores in 1996, including 13 former Strawbridge & Clothier units.
At the end of the year, May Co. operated 365 stores in 30 states. The 28 stores added 5.5 million square feet of selling space.
May Co. added that it plans to open 13 stores in 1997.