MELVILLE NET FALLS 38.8%; MARSHALLS TAKES THE RAP
NEW YORK — With its Marshalls off-price division performing poorly, Melville Corp. reported second-quarter earnings tumbled 38.8 percent to $45.6 million, from $74.5 million, a year earlier.
Per share earnings dropped to 39 cents from 67 cents.
Stanley P. Goldstein, chairman and chief executive officer, said in a statement that Marshalls continues to be hurt by a soft demand for apparel.
Robert D. Huth, executive vice president and chief financial officer, said in an interview, “We think Marshalls will start to improve by the end of the year.”
He said the division has a sharper focus and marketing campaign, and good inventory availability. Marshalls’ profits in the first half were below last year’s, which Huth attributed in part to an investment in promotional programs that he expects will boost long-term results. He declined to break out Marshalls’ figures.
While Marshalls flounders, other divisions including the CVS drug store, Kay-Bee toys and Linen ‘n’ Things chains, are doing well, Goldstein said.
In the quarter ended June 30, Melville’s net sales dipped 1.2 percent to $2.5 billion from $2.53 billion. Same-store sales rose 1.9 percent. Meanwhile, Standard & Poors affirmed its double-A rating on Melville’s senior debt and A-1 plus for commercial paper, but revised the outlook to “negative from stable.” About $300 million in debt is affected.
The new outlook reflects S&P’s concern that the downward trend in operating performance over the past few years will continue in the near future. In the half, earnings fell 18.4 percent to $43.1 million, or 33 cents, from $52.8 million, or 43 cents.
Sales rose 6.9 percent to $4.9 billion from $4.6 billion, and same-store sales were up 3.5 percent. — Fairchild News Service