May Co. sees 3Q earnings drop

Third-quarter earnings by The May Department Stores Co. fell by nearly 39 percent from the third quarter of a year ago. The department store retailer logged net income of $52 million in the 2001 third quarter, compared with $85 million in net income from the same period of 2000.

May's operating income plummeted by more than 24 percent, finishing the third quarter at $176 million, compared with the $232 million in operating profit the retail company posted in last year's third quarter.

The retailer's laggard performance begins right on its top line. May Co. said its same-store sales fell 6.1 percent for the third quarter.

The company was able to keep tabs on its costs during the quarter. Its cost of sales actually fell by more than 3 percent, to $2.3 billion. Its selling, general and administrative expenses as a dollar amount rose just 1.4 percent, to $707 million. The decline in its sales, however, meant that May Co.'s average gross margin dropped by 30 basis points between the 2000 third quarter and this year's period. Also, its SG&A as a percentage of revenue rose by 110 basis points between the two time frames.

The company said its cost of sales as a percentage of revenues climbed in the third quarter, due to the growth in buying and occupancy costs, although this was partially offset by a decrease in the retailer's markdowns. SG&A rose for May Co. because of increases in its department-store payrolls, employee benefit expenses and advertising, said the company.

May Department Stores Co.

QTR 11/3 (x000) 2001 2000 % CHG
a: Includes an extraordinary charge of $3 million from the redemption of $100 million of debentures at 9.875 percent.
Sales $3,195,000 $3,315,000 -3.6
Oper. income (EBIT) 176,000 232,000 -24.1
Net income 52,000a 85,000 -38.8
Per share (diluted) 0.16 0.27 -40.7
Average gross margin 27.6% 27.9%
SG&A expenses 22.1% 21.0%
Nine months
Net retail sales $9,488,000 $9,448,000 0.4
Oper. income (EBIT) 711,000 810,000 -12.2
Net income 272,000 340,000 -20.0
Per share (diluted) 0.85 1.03 -17.5
Average gross margin 29.6% 29.6%
SG&A expenses 22.2% 21.1%

Home & Textiles Today Staff | News & Commentary

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