May acquisition is still costing Macy’s
Macy’s Inc. says it is still paying for its acquisition of St. Louis-based May Department Stores Co.
The Cincinnati-based retailer this morning reported earnings that included charges directly related to May.
Macy’s took a $50 million writedown on private brands acquired in its acquisition of May in 2005.
The company also cited costs related to the consolidation of three Macy’s divisions announced in February, which is expected to save $100 million per year beginning in 2009. One of those divisions was the St. Louis-based Midwest division, which was created out of the former May operations.
The total costs of the special charges reduced the retailer’s per share earnings by 12 cents. Counting the charges, the department store operator said it earned $73 million, or 17 cents per share, in the quarter ended Aug. 2, compared with $74 million, or 16 cents per share, a year earlier.
However, the May acquisition wasn’t totally to blame for the drop in profits.
Macy’s revenue for the quarter fell to $5.7 billion from $5.9 billion. Macy’s says that same-store sales, or sales at stores opened at least a year, dropped 2.1 percent. Same-store sales are considered a key indicator of a retailer’s health.
Macy’s quarterly results came in lower than Wall Street expected. Analysts surveyed by Thomson Reuters had expected earnings of 19 cents per share on revenue of $5.75 billion on a charge-adjusted basis.
Macy’s also warned that its full-year profits will be below Wall Street expectations because of the challenging economy that has seen shoppers be more cautious about spending.
The company said it now expects earnings per share for the year to be in the range of $1.70 to $1.85. Analysts polled by Thomson Reuters had expected $1.86 per share for the full year.
The Associated Press contributed to this report.
I hope they continue to lose their shirts, pun intended. Maybe the constant buying and selling of companies can slow down a bit. This acquisition was driven by the desire to drive the stock price up. The higher ups at Macy’s wanted to increase their excessive bonus and stock option plans.
Glad to see corporate greed paying off the way it should.