ST. LOUIS - May Department Stores Co., the owner of Hecht's and Lord & Taylor among other chains, said yesterday that third-quarter earnings fell 69 percent, the seventh-consecutive quarterly decline, because of costs to combine divisions and a drop in sales.
Net income slumped to $16 million, or 5 cents a share, from $52 million, or 16 cents, in last year's third quarter. Sales in the three months that ended Nov. 2 fell 4.1 percent to $3.05 billion, the St. Louis-based company said in a statement.
May had $6 million in costs related to merging the operations of chains such as Kaufmann's and Filene's in the Northeast. The company combined the divisions to trim expenses amid competition from lower- price retailers such as Kohl's Corp. and Wal-Mart Stores Inc.
Sales at stores open at least a year fell 7.3 percent, May said.
"You're looking for any last nickel you can squeeze out of the cost machine," said Steve Barker, an analyst with the Public Employees Retirement System of Ohio, whose $48 billion in assets included about 640,300 May shares as of September.
Excluding costs related to combining the divisions and retiring debt early, profit would have been 9 cents a share. On that basis, earnings met the reduced average estimate of analysts surveyed by Thomson First Call. Analysts cut their estimate from 17 cents last week after May released preliminary results.
Steep discounting during the past year has trained shoppers to wait for price cuts. Consumers have pared spending amid concerns about jobs and the sluggish economy, leading some analysts to forecast the worst holiday season in more than a decade.
"Everybody has the expectation that they're going to get 40 percent off," said Scott Black, president of Delphi Management, whose $1.3 billion in assets include about 485,000 May shares.
May, which also owns the Strawbridge's and Robinsons-May chains, has been eliminating slower-selling and unprofitable clothing lines, and is trying to attract younger shoppers by introducing private-label brands such as "be," analysts said. The company is facing a legal challenge from Bebe Stores Inc. over the use of the name.
May also has expanded its bridal business, which includes the David's Bridal stores, to boost sales.
At the end of the quarter, May had 445 department stores, 172 David's Bridal locations, 237 After Hours Formalwear sites and 10 Priscilla of Boston stores.
May shares fell 4 cents to $22.44 on the New York Stock Exchange yesterday. The shares are down 39 percent this year.