MAY CO. QUARTER NET UP 4.5%

ST. LOUIS — May Department Stores Co. reported third-quarter earnings rose 4.5 percent to $139 million, or 54 cents a share, from $133 million, or 51 cents, a year earlier.
Net earnings include a charge of $10 million before taxes, or 2 cents a share, for settlement of a bondholder suit. Earnings were in line with Wall Street estimates.
In the quarter ended Oct. 29, net sales rose 6.4 percent to $2.9 billion from $2.7 billion. Same-store sales rose 3.1 percent. Sales at the department stores were up 7 percent to $2.3 billion, while Payless ShoeSource sales gained 4 percent to $540 million.
Same-store sales were up 4.4 percent in the department store group while Payless’s comparable store sales were down 2.6 percent.
“The important thing is that the company maintained operating margins in the quarter,” said Jeffrey Edelman of C.J. Lawrence Deutsche Bank Securities. He said May’s earnings came in a penny above his estimate.
Edelman said the economy seems to be picking up, with employment increasing and higher interest rates dampening demand for hard goods. That, he added, should translate into improved demand for soft goods.
For the fourth quarter, Edelman estimates earnings-per-share of $1.52 against $1.37 fully diluted, and for the year, $2.95 against $2.65. “They should get a bit of operating leverage in the fourth quarter,” he noted.
In the nine months, earnings rose 10.1 percent to $381 million, or $1.47 a share, from $346 million, or $1.33. Sales rose 8 percent to $8 billion from $7.4 billion, with same-store sales up 4.5 percent. Sales at the department stores were up 8.1 percent to $6.4 billion, with same-store sales gaining 5.4 percent. At Payless, sales rose 7.5 percent to $1.6 billion, with same-store sales up 0.7 percent. In the quarter, the company opened 10 department stores, and plans four this month for a total of 15 new units this year. In addition, Robinsons- May is reopening its Topanga Plaza, Calif., unit which was closed after suffering damage in the January 1994 earthquake.
In the quarter, May opened 193 new Payless stores, for a total of 283 for the year to date, and 96 new Payless Kids stores. A total of 317 new Payless and 130 Payless Kids units are slated for the rest of this fiscal year.
— Fairchild News Service

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