May to put $3.6 billion in stores over 5 years CEO tells stockholders of plans for 100 new stores, remodeling 100

May 23, 1998|By BLOOMBERG NEWS

ST. LOUIS -- May Department Stores Co., parent of Hecht's, Lord & Taylor and others, said yesterday that it plans to invest $3.6 billion over five years in its department stores.

By 2002, May will add 100 new department stores to its existing base of 370 stores, remodel or expand 100 stores and invest $350 million in new technology to improve service, Chief Executive Gene Kahn said in a statement to the company's annual meeting.

May Department Stores, which had $12.4 billion in sales for the year that ended January 1998, plans to invest $725 million this year to open 19 new stores and expand seven stores, adding 2.9 million square feet of retail space by the end of the year, the retailer said. May also plans to remodel 22 other stores with a total of 1.5 million square feet of retail space.

May spokeswoman Rhonda West said two of the new stores will replace existing stores, and the company has not announced any coming store closings.

Todd Slater, an analyst at Lazard Freres & Co., said new store locations are likely to be in fast-growing portions of the country, such as Las Vegas.

"There is still mall development taking place, and May companies will be a significant player in new and expanded malls," Slater said. "You're not going to let your competitor get in there without a fight.

"A lot of the space will be recycled," he said, noting the glut of retailing space in some parts of the country. "Some of the stores will be acquisitions. It's hard to know exactly until you see it."

Slater said he expects May to acquire regional department store chains at some point, but "I doubt very much they will overpay for an acquisition." For several years, May has been mentioned as one of the most likely suitors to acquire Dayton Hudson Corp.'s department stores, he said.

The new stores for 1998 include nine Lord & Taylor stores, three Hecht's, one Foley's, one Robinsons-May store, two Kaufmann's and one Filene's. The company has opened a Lord & Taylor and a Filene's this year.

In 1997, May Department Stores opened 11 department stores and remodeled 26, costing $375 million, West said.

"Looking ahead, we are very optimistic about May's future," Kahn said in the statement. "We have performed above plan for the first quarter and are well-positioned for the remainder of the year. Our store companies hold the dominant position in each of their markets, and they generate the highest operating profits per dollar of sales in department store retailing."

The company reported a 15.8 percent increase in first-quarter earnings per share. It earned $110 million, or 44 cents a share, compared with $98 million, or 37 cents a share, a year earlier.

May bought $300 million of its own shares in 1997 and announced plans in February to buy up to $650 million more in the open market.

May shares gained 44 cents to close at $65.125 yesterday on the New York Stock Exchange.

Pub Date: 5/23/98

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