Macy's Inc reported a loss of 14 cents per diluted share from continuing operations for the first quarter of 2008, ended May 3, 2008. These results include two unusual items (described below) that negatively impacted first quarter 2008 earnings by 16 cents per diluted share. Excluding these items, the company would have earned 2 cents per diluted share from continuing operations in the first quarter of 2008.
The first unusual item relates to the consolidation of three Macy's divisions announced in February 2008, which is expected to save approximately $100 million per year beginning in 2009 (approximately $60 million in savings for the partial year in 2008). In the first quarter of 2008, the company booked consolidation costs of $87 million ($55 million after tax or 13 cents per diluted share). First quarter 2008 results also include a reserve of $23 million ($14 million after tax or 3 cents per diluted share) for a potential settlement of litigation related to a wage and hour class-action lawsuit in California. A settlement is contingent on final agreement and court approval.
In the first quarter of 2007, Macy's, Inc. earned 11 cents per diluted share from continuing operations. Excluding May Company merger integration costs of $36 million ($22 million after tax or 5 cents per diluted share), first quarter 2007 diluted earnings per share from continuing operations were 16 cents.
"Given the very difficult economic environment, our company performed relatively well compared to the competition in the first quarter. Macy's, Inc.'s same-store sales for the quarter, while below last year, were significantly better than most of our largest competitors, continuing a trend from the fourth quarter of 2007. This indicates that customers are preferring Macy's and we appear to be capturing market share even in this period of weak consumer spending. Earnings per share are on track to deliver the annual guidance provided at the outset of the year," said Terry J. Lundgren, Macy's, Inc. chairman, president and chief executive officer. "We are running the business with discipline given the weakened level of consumer confidence, as demonstrated by inventory levels at the end of the quarter that were about 4 percent below a year ago. And as we begin implementation of new My Macy's localization initiatives across the country, we are optimistic that our plans for tailored assortments and an improved shopping experience in every location will further enhance our store-level execution."
Sales in the first quarter totaled $5.747 billion, a decrease of 2.9 percent compared to sales of $5.921 billion in the same period last year. On a same-store basis, Macy's, Inc.'s first quarter sales were down 2.6 percent.
In the first quarter of 2008, the company opened a new Macy's store in Westminster, CO, and closed a Macy's store in Memphis, TN, and a Macy's furniture store in Richmond, VA.
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