May Co. 4Q profits down 16.8%
February 18, 2002-- Home Textiles Today,
Steadily losing ground to the nation's big discounters in a recessionary environment, and its margins under heavy pressure from another promotional holiday season, May Department Stores said its fourth-quarter profits dropped off by 16.8 percent, to $431 million from $518 million last year, a slide of $87 million.
As consumers held on tight to their wallets or sought out lower-cost shopping options, sales at the department store chain fell off by 4.0 percent, to $4.73 billion from $4.9 billion last year, a shortfall of almost $200 million. Same-store sales skidded down even further, falling by 6.9 percent. Exacerbating the effects of recession, unseasonably warm weather put a stopper on sales of apparel, the retailer said.
As the retailer dropped its prices in an attempt to draw in consumers, average gross margin thinned by 130 basis points, to 34.0 percent from 35.3 percent the year before. And the cost of attracting consumers grew even higher, driving expenses up by 50 basis points, to 17.1 percent from 16.6 percent a year ago.
In one piece of good news, the retailer reduced its interest costs by 13.9 percent, to $87 million from $101 million last year, generating a pre-tax cash savings of $14 million.
For all of last year, May profits dropped off by 18.1 percent, to $703 million from $858 million. Sales slipped by 1.1 percent, to $14.2 billion from $14.4 billion. Same-store sales fell by 4.6 percent in a persistently weak environment for full-priced retailers.
"It was a challenging and requiring year for our company, our industry and our nation," said Gene Kahn, chairman and ceo. "However, in this difficult environment — an economic recession, a national disaster and unseasonably warm weather throughout the country during the holiday season — May performed admirably, and our associates deserve great credit for their hard work and dedication."
May Department Stores Co.
|Qtr. 2/2/02 (x000)||2002||2001||% CHG|
|a-12-month results include a one-time, after-tax loss of $3 million during the third quarter due to the call of $100 million of 9.875% notes due in 2021.
|Oper. income (EBIT)||782,000||937,000||-16.5|
|Per share (diluted)||1.36||1.59||-14.5|
|Average gross margin||34.0%||35.3%||—|
|Oper. income (EBIT)||1,493,000||1,747,000||-14.5|
|Per share (diluted)||2.21||2.62||-15.6|
|Average gross margin||31.1%||31.6%||—|