The May Department Stores Company Reports Results for The First
Quarter of Fiscal 2004 ST. LOUIS, May 11 /PRNewswire-FirstCall/ --
The May Department Stores Company today announced earnings per
share, net earnings, and net sales for the first quarter of fiscal
2004. For the 13 weeks ended May 1, 2004, earnings per share were
24 cents, compared with 23 cents per share in the same period a
year ago. Net earnings were $76 million, compared with $72 million
in the prior year. First quarter 2004 earnings include store
divestiture costs of $7 million, or 2 cents per share. Excluding
these costs, 2004 first quarter earnings were $81 million, or 26
cents per share. First quarter 2003 earnings included a $31
million, or 10 cents per share, tax credit that was recorded upon
the resolution of various federal and state income tax issues. Net
sales for the first quarter 2004 were $2.96 billion, an increase of
3.1%, compared with $2.87 billion in the 2003 first quarter.
Store-for-store sales increased 1.7% for the quarter.
Store-for-store sales for the first quarter increased 2.5%,
excluding the remaining 19 stores that May previously announced it
will divest. First quarter sales showed strong performances in
ladies' accessories, footwear, and apparel. The importance of color
and more tailored looks contributed to increases in ladies',
juniors', and men's categories. Handbags and small leather goods
remain the must-have accessory. Costume jewelry, led by earrings,
and leather-strap watches were particularly strong, as were key
fashion looks in sunglasses, headwear, hair accessories, and
flowers. Ladies' footwear was fueled by dressier pumps, strappy
styles, and sandals, as well as genuine athletic and
athletic-inspired looks. New styling and product offerings, driven
by jackets and skirts, contributed to growth in tailored ladies'
sportswear separates and suits. Juniors' and young men's apparel
responded to this season's fashion trends and performed well. Men's
clothing and dress furnishings outperformed the store, based on the
return to a more dressed-up look. Children's, dresses, and home
furnishings lagged overall store performance. May opened one new
department store during the 2004 first quarter: a Hecht's store in
Wilmington, N.C. Seven additional department stores are planned for
2004: two Foley's stores in Houston and El Paso, Texas; a Filene's
in Dartmouth, Mass.; a Hecht's in Nashville, Tenn.; a Meier &
Frank in Portland, Ore.; a Robinsons-May in Rancho Cucamonga,
Calif.; and a location for The Jones Store in Kansas City, Kansas.
May's Bridal Group opened three David's Bridal stores and three
After Hours Formalwear stores in the first quarter. The Bridal
Group plans to open an additional 27 David's Bridal stores, 17
After Hours stores, and two Priscilla of Boston stores by year-end.
At the end of the first quarter, May operated 439 department stores
under the names of Lord & Taylor, Famous-Barr, Filene's,
Foley's, Hecht's, Kaufmann's, L.S. Ayres, Meier & Frank,
Robinsons-May, Strawbridge's, and The Jones Store, as well as 213
David's Bridal stores, 457 After Hours Formalwear stores, and 10
Priscilla of Boston stores in its Bridal Group. May currently
operates in 46 states, the District of Columbia, and Puerto Rico.
The company discloses earnings and earnings per share on both a
GAAP basis and excluding restructuring costs because it believes
these are important metrics, and they are presented to enhance
comparability between years. These metrics are used internally to
evaluate results from operations. This release also contains
forward-looking statements as defined by the Private Securities
Litigation Reform Act of 1995. While this release reflects all
available information and management's judgment and estimates of
current and anticipated conditions and circumstances and is
prepared with the assistance of specialists within and outside the
company, there are many factors outside of our control that have an
impact on our operations. Such factors include but are not limited
to competitive changes, general and regional economic conditions,
consumer preferences and spending patterns, availability of
adequate locations for building or acquiring new stores, and our
ability to hire and retain qualified associates. Because of these
factors, actual performance could differ materially from that
described in forward-looking statements. THE MAY DEPARTMENT STORES
COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED RESULTS OF
OPERATIONS (Unaudited) 13 Weeks Ended May 1, 2004 May 3, 2003
(millions, except % to % to per share) $ Net Sales $ Net Sales Net
sales $ 2,963 $ 2,873 Cost of sales: Recurring 2,120 71.6% 2,088
72.7% Restructuring markdowns 5 0.1 - 0.0 Selling, general, and
administrative expenses 639 21.5 640 22.3 Restructuring costs 2 0.1
- 0.0 Interest expense, net 76 2.6 80 2.7 Earnings before income
taxes 121 4.1 65 2.3 Provision (credit) for income taxes 45 37.0*
(7) (10.7)* Net earnings $ 76 2.6% $ 72 2.5% Diluted earnings per
share $.24 $ .23 Excluding restructuring costs: Net earnings $ 81
2.7% $ 72 2.5% Diluted earnings per share $.26 $ .23 Dividends paid
per common share $.24-1/4 $ .24 Diluted average shares and
equivalents 308.3 307.3 * Percent represents effective income tax
rate. Net Sales - Percent Increase From Prior Year Net sales
include merchandise sales and lease department income. Store-
for-store sales compare sales of stores open during both periods
beginning the first day a new store has prior year sales and
exclude sales of stores closed during both periods. 13 Weeks Ended
May 1, 2004 Store-for- Total Store 3.1% 1.7% THE MAY DEPARTMENT
STORES COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE
SHEETS (Unaudited and Subject to Reclassification) (millions) May
1, May 3, ASSETS 2004 2003 Cash and cash equivalents $ 438 $ 78
Accounts receivable, net 1,528 1,571 Merchandise inventories 3,005
3,163 Other current assets 117 102 Total Current Assets 5,088 4,914
Property and equipment, net 5,100 5,518 Goodwill and other
intangibles 1,670 1,615 Other assets 126 131 Total Assets $11,984
$12,178 LIABILITIES AND May 1, May 3, SHAREOWNERS' EQUITY 2004 2003
Notes payable $- $390 Current maturities of long-term debt 147 170
Accounts payable and accrued expenses 2,321 2,183 Total Current
Liabilities 2,468 2,743 Long-term debt 3,788 3,936 Deferred income
taxes 778 794 Other liabilities 504 501 ESOP preference shares 228
257 Unearned compensation - (91) Shareowners' equity 4,218 4,038
Total Liabilities and Shareowners' Equity $11,984 $12,178 THE MAY
DEPARTMENT STORES COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited and Subject to
Reclassification) (millions) 13 Weeks Ended May 1, May 3, 2004 2003
Operating activities: Net earnings $ 76 $ 72 Depreciation and
amortization 140 138 Increase in working capital and other (185)
(156) Total operating activities 31 54 Investing activities: Net
additions to property and equipment (95) (186) Total investing
activities (95) (186) Financing activities: Net issuances
(payments) of notes payable and long-term debt (9) 232 Net
issuances (purchases) of common stock 21 (4) Dividend payments (74)
(73) Total financing activities (62) 155 Increase (decrease) in
cash and cash equivalents (126) 23 Cash and cash equivalents,
beginning of period 564 55 Cash and cash equivalents, end of period
$ 438 $ 78 THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES NOTES
TO CONDENSED CONSOLIDATED FINANCIAL INFORMATION Interim Results --
The unaudited condensed consolidated results of operations have
been prepared in accordance with the company's accounting policies
as described in the 2003 Annual Report to Shareowners and should be
read in conjunction with that report. In the opinion of management,
this information is fairly presented and all adjustments
(consisting only of normal recurring adjustments) necessary for a
fair statement of the results for the interim periods have been
included; however, certain items are included in this statement
based on estimates for the entire year. Operating results of
periods, which exclude the Christmas season, may not be indicative
of the operating results that may be expected for the fiscal year.
Reclassifications -- Certain prior period amounts have been
reclassified to conform with current year presentation. Cost of
Sales -- For the 13 weeks ended May 1, 2004, recurring cost of
sales as a percent of net sales decreased 1.1%, principally because
of a 0.9% decrease in the cost of merchandise and a 0.4% decrease
in buying and occupancy costs. In 2004, restructuring markdowns of
$5 million were incurred to liquidate inventory as stores to be
divested were closing. Selling, General, and Administrative
Expenses (SG&A) -- SG&A expenses as a percent of net sales
decreased from 22.3% in the first quarter of 2003 to 21.5% in the
first quarter of 2004 because of a 0.7% decrease in payroll and a
0.2% decrease in advertising costs. Restructuring Costs -- In July
2003, the company announced its intention to divest 34
underperforming department stores. These divestitures will result
in total estimated charges of $380 million, consisting of asset
impairments of $317 million, inventory liquidation losses of $25
million, severance benefits of $23 million, and other charges of
$15 million. Approximately $50 million of the $380 million
represents the cash cost of the store divestitures, not including
the benefit from future tax credits. Of the $380 million of
expected total charges, $335 million has been recognized to date,
$7 million of which was recognized in the first quarter of 2004.
Asset impairment charges were recorded to reduce store assets to
their estimated fair value because of the shorter period over which
they will be used. Estimated fair values were based on estimated
market values for similar assets. The company is negotiating
agreements with landlords and developers for each store
divestiture. Through the end of the 2004 first quarter, 15 stores
have been closed. Severance benefits are recognized as each store
is closed. Severance benefits of $9 million for approximately 1,400
associates and inventory liquidation and other costs of $9 million
have been incurred to date. Remaining amounts will be recognized as
each store is divested. Income Taxes -- The effective tax rate for
the first quarter of 2004 was 37.0%, compared with (10.7)% for the
first quarter of 2003. The change is due to a $31 million tax
credit recorded in the first quarter of 2003 upon the resolution of
various federal and state income tax issues. Excluding the $31
million tax credit, the company's first quarter 2003 estimated
effective tax rate was 37.0%. Trailing Years' Results -- Operating
results for the trailing years were as follows (millions, except
per share): May 1, May 3, 2004 2003 Net sales $ 13,433 $ 13,268 Net
earnings $ 438 $ 544 Diluted earnings per share $ 1.42 $ 1.76 For
more information, please contact Sharon Bateman at (314) 342-6494
DATASOURCE: The May Department Stores Company CONTACT: Sharon
Bateman, +1-314-342-6494, for May Department Stores Company
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