MERCANTILE RETAIL FOURTH-QUARTER NET RISES 17.5%, SALES UP 4.6%

Byline: Valerie Seckler

NEW YORK — Sparked by cosmetics, fragrances and men’s wear, Mercantile Stores reported Wednesday that earnings from retail operations climbed 17.5 percent in the fourth quarter.
Results were aided by a LIFO accounting credit, as sales rose 4.6 percent.
Net income from Mercantile’s 102 stores was $56.3 million, or $1.53 per share, in the quarter ended Jan. 28, up from $47.9 million, or $1.30, in last year’s fourth quarter. Sales increased to $928.6 million from $888.1 million in the period and same-store sales rose 2.5 percent.
William Carr, treasurer of the Fairfield, Ohio-based retailer, said the same-store gain was an improvement over the 1.2 percent level achieved in the first nine months. He said Mercantile rallied from negative comps in November, achieving gains of 3.6 percent in December and 4.7 percent in January.
“So far, February’s been tough,” he added in an interview, saying sales in stores open for at least one year are “running slightly negative.”
Cosmetics, fragrances and men’s wear, including the Polo and Tommy Hilfiger collections, were Mercantile’s three strongest categories in the quarter, he noted. Earnings from retail stores in the latest quarter were lifted by a LIFO credit of $8.1 million, or 22 cents per share, compared with a credit of $1.9 million, or 5 cents, in the prior-year period. Mercantile said the LIFO credit reflects price deflation as well as excess reserves established on an estimated basis in the first three quarters of both years.
Profits from non-store operations, which include the firm’s credit and real estate operations, plunged 60.5 percent to $3.2 million, or 9 cents per share, from $8.1 million, or 22 cents.
Overall earnings advanced 6.3 percent to $59.5 million, or $1.62 per share, from $56 million, or $1.52.
Fiscal 1994 net income from store operations surged 39.7 percent to $86.2 million, or $2.34 per share, from $61.7 million, or $1.68. Yearend revenue totaled $2.8 billion, a 3.3 percent increase over $2.7 billion. Same-store sales were up 1.7 percent for the year.
LIFO credits applied to 1994 earnings from retail operations amounted to $3.9 million, or 11 cents per share, in 1994 and $2.3 million, or 6 cents, in 1993.
“While, in the fourth quarter, we had hoped to maintain the cumulative profit percentage improvement pace of the previous nine months, we’re pleased that our retail business posted an earnings increase for the sixth successive quarter,” David Nichols, chairman, said in a statement, referring to a 60 percent earnings increase achieved in the first nine months of 1994.
Net income from non-store operations for the year skidded 14.5 percent to $21.3 million, or 58 cents a share, from $24.9 million, or 67 cents.
Overall earnings for the year advanced 15.3 percent to $103.4 million, or $2.81 a share, from $89.7 million, or $2.44.
The 1994 net includes a relocation charge of $3 million, or 8 cents per share, and a post-employment benefit accounting charge of $1.1 million, or 3 cents. In addition, the 1993 net reflects a credit of $3.1 million, or 9 cents per share, due to an income tax accounting change.
Mercantile stock, traded on the New York Stock Exchange, closed Wednesday at 42 1/2, down 5/8. — Fairchild News Service

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