May Department Stores (NYSE: MAY) had a less sparkling allure today, after the department store retailer reported lackluster first-quarter earnings, missing Wall Street's expectations. The only bright spot to be found was in the retailer's sales.
First-quarter earnings came in 5.6% higher at $76 million, or $0.24 per share. When you back out costs for store divestitures, however, profit increased 12.5% to $81 million, or $0.26 per share. Net sales were 3.1% higher at $2.96 billion, while same-store sales inched up 1.7%.
These have been trying times for retailers. While some have reaped the benefits of an improving consumer climate, others have been snubbed. May's view makes one wonder if its department store names -- which include Hecht's, Lord & Taylor, and Filene's, as well as David's Bridal -- may be losing traction to other rivals.
If there's one interesting part of today's earnings news, it's May's improved revenue figure, which included strength in women's accessories and footwear; however, the rather paltry increase in same-store sales signals a retailer that's not as popular as many others have been over recent months.
Like the struggling Sears (NYSE: S), May resides in a middle-of-the-road niche. It's where would-be customers might choose Federated Department Stores' (NYSE: FD) Macy's and Bloomingdale's, switch up to a luxury name like Nordstrom (NYSE: JWN), or set their sights lower by picking up some discount items at Wal-Mart (NYSE: WMT) or Target (NYSE: TGT). During the last months, there's been a lot of buzz about shoppers' upscale tastes.
The coming months should prove interesting ones for department store retailers in general, including May. After all, in the last few days, pundits have tossed around the idea that a rising interest-rate climate on the heels of better U.S. employment prospects might lead many consumers to drop out of shopping, for a while anyway. Although that could change the current ultra-luxury trend and drive shoppers into department store venues like May's, just how consumers will react is anybody's guess -- truth is, the idea of a much-improved job climate sounds like a real catalyst for a boom in retail.
May's earnings today seem less than inspiring, especially after seeing recent successes for other retailers. Tomorrow should be interesting -- if watching retail interests you -- when we see what rival Federated has in store.
Both May and Federated offer a dividend, one of the criteria for our Motley Fool Income Investor picks. See what stocks Mathew Emmert recommends for growth and income by taking a 30-day free trial.
Alyce Lomax does not own shares of any companies mentioned.
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