RICHMOND, Va. — May Department Stores Co. is repositioning itself on multiple fronts as it continues to slim down its inventory and broaden its customer base, said Gene Kahn, chairman and chief executive officer, at the firm’s annual meeting here Friday.
That plan is likely to include a bid for Marshall Field’s, though Kahn wouldn’t confirm speculation about May’s interest. “I really will not comment on that,” Kahn told a handful of reporters after the meeting.
Analysts have widely speculated that May and Federated Department Stores Co. will engage in a bidding war for Target Corp.’s Marshall Field’s stores, which observers have estimated could go for more than $2 billion.
Kahn, sporting a gray pinstriped suit and a silver-and-gray dotted tie, opted not to read from his remarks, which were circulated after the short, seven-minute meeting at the Jefferson Hotel, a historic, opulent hotel founded in 1895 that literally pays homage to the movie classic “Gone With the Wind.” The decision left some of the 10 shareholders who attended the meeting a little puzzled, but they didn’t ask a single question about the performance of the St. Louis-based operator of the Hecht’s, Lord & Taylor and Filene’s, among other nameplates.
In his remarks, Kahn emphasized the firm’s new initiatives, which involve aggressively pursuing higher-priced lines, eliminating duplication in merchandise offerings, a goal of increasing “proprietary merchandise” by 20 percent of overall revenues and increasing sales of nonapparel gift items, such as Apple iPods, DVD/home theater units and satellite radio gear.
“From upscale fragrances and prestige skin care products, from status names in ladies’ handbags and suits, to designer dress shirts and men’s modern sportswear collections, better lines were some of our strongest performers in 2003,” Kahn said in the written statement. “This year, new better resources and offerings are bringing even more newness, fashion and excitement to our stores.”
May introduced Lauren Ralph Lauren, Calvin Klein and Jones Signature in women’s better sportswear this spring and plans to launch Michael by Michael Kors in women’s and men’s apparel and in handbags this fall, he said. “The customer is definitely responding to luxury, and fashion is showing little price resistance,” Kahn said in the statement. “This is revitalizing department stores, and our goal is to attract this customer to capture a larger share of the better business.”
Two of the strongest growth segments in women’s are the better and moderate components.
Within those segments, tailored looks and color — particularly all shades of pink and technicolor brights — are driving the business, Kahn said.
“There is obviously, both with the female and male customers, more a return to dressy,” he added at the press session. “The more tailored looks are really the big driver of business.”
These segments, combined with sales of accessories and tailored looks, produced only modest results in the first quarter, however. May posted an increase in first-quarter sales of 3.1 percent, to $2.96 billion from $2.87 billion a year ago, while comparable-store sales rose 1.7 percent. Net income grew 5.6 percent in the first quarter to $76 million, or 24 cents a diluted share, from $72 million, or 23 cents, a year ago.
Kahn said he picked Richmond as the site of the company’s 95th annual meeting to showcase the newest Hecht’s store at Short Pump Town Center, which features the latest prototype design and layout for its department stores. The design provides more room for apparel and accessories, wider aisles and products grouped by age or lifestyle.
“The store is performing very well,” Kahn said.
May plans to roll out the concept with its $600 million capital expenditure plan this year, which includes opening eight department stores and remodeling or expanding 12 others, according to Kahn. The Bridal Group plans to open 30 David’s Bridal stores this year, 20 After Hours stores and two Priscilla of Boston stores.
Also, May plans to expand its branding campaign and to “build on the animation theme with additional attention-grabbing commercials that feature animated mannequins,” Kahn said.