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May: The $100 million company

Leaving behind it $318 million in costs last year tied to the shutdown of 34 money-losing Lord & Taylor stores, May Department Stores Co. recorded a second quarter profit of $101 million, reversing a prior-year loss of $110 million.

Still closing underperforming stores, May profits in the period were hobbled by $15 million in restructuring costs.

Hurt by a lagging home fashions business, sales at the parent of Marshall Field's, Filene's, Foley's and David's Bridal stores, among other nameplates, slipped 1.5 percent, to $2.96 billion from $3 billion a year ago. Same-store sales declined 1.6 percent.

In a lift to the bottom line, May bulked its margins while whittling costs. Average gross margin improved 50 basis points, or one half of a percentage point, to 29.9 percent from 29.4 percent the prior year. But hampered by declining sales, gross margin dollars rose just 0.3 percent, to $885 million from $882 million a year ago. Operating costs were pared 50 basis points, or one half of a percentage point, to 21.4 percent of sales from 21.9 percent the preceding year.

Home furnishings was a notably weak performer during the quarter, the retailer noted, falling behind total store performance. "Despite good sales in a number of merchandise categories, our overall sales performance did not meet our expectations in second quarter," the retailer said. "Sales of casual sandals, shorts and other seasonal apparel were not as strong as last year, and apparel clearance — which is a key July sales driver — was less than anticipated. Home furnishings lagged the balance of the store's performance."

May Department Stores Co.

Qtr. 7/31 (x000) 2004 2003 % chg
Sales $2,956,000 $3,000,000 -1.5
Oper. Income (EBIT) 251,000 225,000 6.9
Net income 101,000a (110,000)a --
Per share (diluted) 0.33 (0.39) --
Average gross margin 29.9% 29.4% --
SG&A expenses 21.4% 21.9% --
Six months 2004 2003 % chg
Sales 5,919,000 5,873,000 0.8
Oper. Income (EBIT) 450,000 370,000 21.6
Net income 177,000b (38,000)b --
Per share (diluted) 0.57 (0.16) --
Average gross margin 29.1% 28.4% --
SG&A expenses 21.5% 22.1% --
(loss)
a-Six month results include $9 million in restructuring costs, compared with $318 million during the same period a year ago; and a $59 million provision for income taxes, compared with a $63 million income tax credit last year.
b-Six month results include $11 million in restructuring costs, compared with $318 million a year ago; and a $104 million provision for income taxes versus a prior-year income tax credit of $70 million.


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