May has strong Jan., Feb. & March
Don Hogsett -- Home Textiles Today, May 17, 2004
First-quarter profits at May Department Stores Co. improved 5.6 percent, to $76 million from $72 million last year, as stronger margins and lower costs offset a handful of remaining charges tied to the shutdown of 34 underperforming Lord & Taylor department stores.
Sales at the retailer improved 3.1 percent, to $3 billion from $2.9 billion last year, while same-store sales increased 1.7 percent. Same-store sales climbed even higher, 2.5 percent, excluding results of the 19 stores that remain to be closed.
Putting a cap on bottom-line growth during the opening quarter, and acting as a partial offset to improving operations, were $5 million in restructuring markdowns stemming from inventory liquidation at shuttered stores, and another $2 million in restructuring costs.
Providing a solid boost to earnings, average gross margin widened 110 basis points, or 1.1 percentage points, to 28.4 percent from 27.3 percent a year ago. Gross margin dollars climbed 7.4 percent, to $843 million from $785 million during the same period a year ago.
In another assist, operating costs were whittled .02 percent, to $639 million from $640 million a year ago, yielding a cash savings of $1 million. When measured as a percentage of rising sales, costs were pared 80 basis points, or eight-tenths of a percentage point, to 21.5 percent from 22.3 percent.
In another prop to the bottom line, interest expense was whittled 5 percent, to $76 million from $80 million a year ago, generating another cash savings of $4 million.
In an operational improvement, stockpiles were throttled down 5 percent, to $3 billion from $3.2 billion, another savings of $158 million.
Helped by improving operations, operating profits jumped more than a third, rising 37.2 percent, to $199 million from $145 million last year. But, overall, profits rose at a more sluggish pace of 5.6 percent as the retailer paid $45 million in taxes, while last year it recorded a tax benefit of $7 million.
May Department Stores Co.
|Qtr. 5/1 (x000)||2004||2003||% chg|
|Oper. income (EBIT)||199,000||145,000||37.2|
|Per share (diluted)||0.24||0.23||4.3|
|Average gross margin||28.4%||27.3%||—|
|a-First-quarter results include $5 million in restructuring markdowns tied to the liquidation of inventory in 34 closed department stores; restructuring costs of $2 million; and an income-tax provision of $45 million, compared with a $7 million income-tax credit during the same period a year ago.|