EXHIBIT 99.1
MAY NEWS
THE MAY DEPARTMENT STORES COMPANY REPORTS RESULTS
FOR THE THIRD QUARTER AND FIRST NINE MONTHS OF FISCAL 2003:
THIRD QUARTER EARNINGS PER SHARE WELL-ABOVE LAST YEAR
ST. LOUIS, Nov. 11, 2003 - The May Department Stores Company [NYSE: MAY]
today announced results for the third quarter of fiscal 2003.
For the 13 weeks ended Nov. 1, 2003, earnings per share were 15 cents,
compared with earnings per share of 5 cents in the similar period a year ago.
Net earnings were $47 million, compared with net earnings of $16 million the
prior year. Third quarter 2003 results include a charge of $6 million, or 1
cent per share, for asset impairments and other costs related to the previously
announced divestiture of 34 stores. Excluding these costs, third quarter 2003
earnings were $51 million, or 16 cents per share. Third quarter 2002 earnings
were $22 million, or 7 cents per share, excluding $9 million, or 2 cents per
share, of division combination costs.
Third-quarter net sales were $2.98 billion, a 0.5% decrease, compared with
$2.99 billion in 2002. Store-for-store sales decreased 2.4% for the quarter.
For the nine months ended Nov. 1, 2003, net loss per share was 1 cent,
compared with earnings per share of 50 cents in 2002. Net earnings were $9
million versus $155 million a year ago. Results for the first nine months of
2003 include store divestiture costs of $324 million, or 70 cents per share,
and a $31 million, or 10 cents per share, tax credit recorded following the
resolution of various federal and state income tax issues. Excluding these
items, 2003 net earnings for the nine months were $183 million, or 59 cents per
share. Nine-month 2002 earnings were $223 million, or 72 cents per share,
excluding division combination charges of $108 million, or 22 cents per share.
Net sales for the first nine months of 2003 were $8.85 billion, a 2.9%
decrease, compared with $9.12 billion in the similar 2002 period.
Store-for-store sales decreased 4.8% for the first nine months of fiscal 2003.
May opened four new department stores during the quarter: a Famous-Barr
store in Columbia, Mo.; a Foley's store in Denton, Texas; a Hecht's store in
Richmond, Va.; and a Kaufmann's store in Pittsburgh. The company opened a
total of 10 new department stores in 2003. Year-to-date store openings for
May's Bridal Group include 20 David's Bridal stores and three After Hours
Formalwear stores. David's and After Hours plan to open 10 stores and 8 stores,
respectively, by year-end.
- more -
2
During the 2003 third quarter, the company acquired two tuxedo rental and
sales retailers - Desmonds Formalwear and Tyndall's Formal Wear - adding 71
stores to the After Hours unit of May's Bridal Group.
Subsequent to the third quarter, May entered into an asset purchase
agreement with The Gingiss Group, Inc., a national tuxedo rental and sales
chain, to purchase certain assets of the company including 125 stores and
related leases, related trade names, and inventory. The agreement is pending
completion of a sale auction and the approval of the U.S. Bankruptcy Court for
the District of Delaware, where the Gingiss bankruptcy is pending.
At the end of the third quarter, May operated 450 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 200 David's Bridal stores, 328 After Hours Formalwear
stores, and 10 Priscilla of Boston stores. May operates in 46 states, the
District of Columbia, and Puerto Rico.
# # #
This release 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.
CONDENSED CONSOLIDATED FINANCIAL INFORMATION FOLLOWS
3
<Table>
THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED RESULTS OF OPERATIONS
(unaudited)
13 Weeks Ended 39 Weeks Ended
Nov. 1, 2003 Nov. 2, 2002 Nov. 1, 2003 Nov. 2, 2002
% to % to % to % to
(millions, except per share) $ Net Sales $ Net Sales $ Net Sales $ Net Sales
<s> <c> <c> <c> <c> <c> <c> <c>
Net sales $ 2,976 $ 2,992 $ 8,849 $ 9,118
Cost of sales:
Recurring 2,160 72.6% 2,171 72.6% 6,366 71.9% 6,493 71.2%
Restructuring markdowns 1 0.0 3 0.1 1 0.0 23 0.3
Selling, general, and
administrative expenses 658 22.1 691 23.1 1,955 22.1 2,006 22.0
Restructuring costs 5 0.2 6 0.2 323 3.7 85 0.9
Interest expense, net 78 2.6 96 3.2 238 2.7 265 2.9
Earnings (loss) before
income taxes 74 2.5 25 0.8 (34) (0.4) 246 2.7
Provision (credit) for
income taxes 27 37.0* 9 37.0* (43) 126.8* 91 37.0*
Net earnings $ 47 1.6% $ 16 0.5% $ 9 0.1% $ 155 1.7%
Diluted earnings (loss)
per share** $ 0.15 $ 0.05 $ (0.01) $ 0.50
Excluding restructuring
costs:
Net earnings $ 51 1.7% $ 22 0.7% $ 214 2.4% $ 223 2.4%
Diluted earnings per share**$ 0.16 $ 0.07 $ .69 $ 0.72
Dividends paid
per common share $ 0.24 $ 0.23-3/4 $ 0.72 $ 0.71-1/4
Diluted average shares
and equivalents 290.5 307.4 289.9 308.4
* Percent represents effective income tax rate.
** Based on earnings (loss) available for common shareowners. See notes to financial information.
</Table>
Net Sales - Percent Decrease From Prior Year
Net sales include merchandise sales and lease department income. Store-for-
store sales compare sales of stores open during both years beginning
the first day a new store has prior year sales and excludes sales of stores
closed during both periods.
13 Weeks Ended 39 Weeks Ended
Nov. 1, 2003 Nov. 1, 2003
Store-for- Store-for-
Total Store Total Store
(0.5)% (2.4)% (2.9)% (4.8)%
4
<Table>
THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(millions)
Nov. 1, Nov. 2, LIABILITIES AND Nov. 1, Nov. 2,
ASSETS 2003 2002 SHAREOWNERS' EQUITY 2003 2002
<s> <c> <c> <c> <c> <c>
Cash and cash equivalents $ 65 $ 65 Notes payable $ 270 $ 618
Accounts receivable, net 1,449 1,540 Current maturities of
Merchandise inventories 3,493 3,596 long-term debt 235 315
Other current assets 98 74 Accounts payable and
Total Current Assets 5,105 5,275 accrued expenses 2,387 2,415
Total Current Liabilities 2,892 3,348
Property and equipment, net 5,155 5,427
Goodwill and other intangibles 1,638 1,607 Long-term debt 3,802 4,041
Other assets 129 115 Deferred income taxes 831 729
Other liabilities 525 396
ESOP preference shares 241 272
Unearned compensation (91) (152)
Shareowners' equity 3,827 3,790
Total Liabilities and
Total Assets $ 12,027 $ 12,424 Shareowners' Equity $ 12,027 $ 12,424
</Table>
<Table>
THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(millions) 39 Weeks Ended
Nov. 1, Nov. 2,
2003 2002
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Operating activities:
Net earnings $ 9 $ 155
Depreciation and amortization 426 406
Store divestiture asset impairments 317 -
Decrease in working capital and other (61) (17)
Total operating activities 691 544
Investing activities:
Net additions to property and equipment,
and business combinations (480) (598)
Total investing activities (480) (598)
Financing activities:
Net issuances (payments) of notes payable
and long-term debt 43 287
Net (purchases) issuances of common stock (24) (2)
Dividend payments (220) (218)
Total financing activities (201) 67
Increase in cash and cash equivalents 10 13
Cash and cash equivalents, beginning of period 55 52
Cash and cash equivalents, end of period $ 65 $ 65
</Table>
5
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 2002
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. The company believes disclosure of earnings and earnings per
share excluding restructuring costs are important metrics and are presented to
enhance comparability between years. These metrics are used internally to
evaluate results from operations.
Reclassifications
Certain prior period amounts have been reclassified to conform with current
year presentation.
Cost of Sales
Recurring cost of sales as a percent of net sales was 72.6% for both the third
quarter of 2003 and 2002. For the 2003 third quarter, a 0.3% increase in
occupancy costs was offset by a 0.3% decrease in the cost of merchandise. In
addition, $3 million and $23 million of restructuring markdowns were incurred
in the third quarter and first nine months of 2002, respectively, related to
division combinations to conform merchandise assortments and to synchronize
pricing and promotional strategies. For the 39 weeks ended Nov. 1, 2003,
recurring cost of sales as a percent of net sales increased 0.7%, principally
due to a 0.6% increase in occupancy costs.
Selling, General, and Administrative Expenses (SG&A)
SG&A expenses as a percent of net sales decreased from 23.1% in the third
quarter of 2002 to 22.1% in the third quarter of 2003, principally due to an
0.8% decrease in payroll costs, a 0.5% decrease in advertising costs, and a
0.3% decrease in credit costs, offset by a 0.4% increase in pension costs.
SG&A expenses as a percent of net sales increased from 22.0% in the first nine
months of 2002 to 22.1% in the first nine months of 2003. For the first nine
months of 2003, pension costs increased 0.3% and other expenses increased 0.3%,
offset by a 0.3% decrease in credit expense and a 0.2% decrease in advertising
costs.
Restructuring Costs
Store Divestitures - In the second quarter of 2003, the company announced its
intention to divest 34 underperforming department stores. These divestitures
will result in total estimated charges of approximately $380 million,
consisting of asset impairments of $317 million, inventory liquidation losses
of $25 million, severance benefits of $23 million, and other charges of
approximately $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,
$6 million was recognized in the third quarter of 2003 and $324 million was
recognized in the first nine months of 2003. Asset impairment charges were
recorded to reduce store assets to their estimated fair value due to the
shorter period over which they will be used. Estimated fair values were based
on estimated market values for similar assets. The company will continue to
fulfill its obligations under existing agreements to operate each store until
satisfactory arrangements are negotiated for divestiture. This process may
take three or more years to complete. Through the end of the third quarter,
two stores have been closed. Severance benefits of $4 million for 250
associates and inventory liquidation and other costs of $3 million have been
incurred to date. Remaining amounts will be recognized as each store is
divested.
Division Combination Costs - In 2002, restructuring charges of $114 million
were recognized, of which $102 million resulted from the Filene's/Kaufmann's
and Robinsons-May/Meier & Frank division combinations and $12 million resulted
from the closure of the Arizona Credit Center and realignment of the company's
data center. Of the total charges, $9 million was recognized in the third
quarter of 2002, $3 million of which was included as cost of sales. Charges of
$108 million were recognized in the first nine months of 2002, of which $23
million was included as cost of sales. As of Nov. 1, 2003, severance benefits
of $4 million are payable to former associates whose jobs were eliminated in
these combinations. All severance will be paid by the end of 2004.
Income Taxes
The effective tax rate was 37.0% for both the third quarter of 2003 and 2002.
The effective tax rate for the first nine months of 2003 was 126.8%, compared
with 37.0% for the first nine months of 2002. The change is primarily 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 estimated effective income tax rate is 37.0%.
6
Diluted Earnings (Loss) Per Share
The following tables reconcile net earnings and weighted average shares
outstanding to amounts used to calculate basic and diluted earnings (loss) per
share for the periods shown (millions, except per share).
<Table>
13 Weeks Ended
Nov. 1, 2003 Nov. 2, 2002
Earnings Shares EPS Earnings Shares EPS
<s> <c> <c> <c> <c> <c> <c>
Net earnings $ 47 $ 16
ESOP preference shares'
dividends (4) (5)
Basic EPS 43 290.0 $ 0.15 11 288.3 $ 0.05
ESOP preference shares - - 4 18.4
Assumed exercise of options
(treasury stock method) 0.5 - 0.7
Diluted EPS $ 43 290.5 $ 0.15 $ 15 307.4 $ 0.05
</Table>
<Table>
39 Weeks Ended
Nov. 1, 2003 Nov. 2, 2002
Earnings Shares EPS Earnings Shares EPS
<s> <c> <c> <c> <c> <c> <c>
Net earnings $ 9 $ 155
ESOP preference shares'
dividends (12) (14)
Basic EPS 3 289.9 $ (0.01) 141 288.1 $ 0.50
ESOP preference shares - - 13 18.7
Assumed exercise of options
(treasury stock method) - - - 1.6
Diluted EPS $ (3) 289.9 $ (0.01) $ 15 308.4 $ 0.50
</Table>
Trailing Years' Results
Operating results for the trailing years were as follows (millions, except per
share):
<Table>
52 Weeks Ended
Nov. 1, Nov. 2,
2003 2002
<s> <c> <c>
Net sales $ 13,222 $ 13,693
Net earnings $ 396 $ 586
Diluted earnings per share $ 1.25 $ 1.86
</Table>