May’s Earnings Hurt by Slow Sales, Merger Costs

May Department Stores Co.’s earnings fell by nearly half in the second quarter, hurt by expenses from a pending merger with rival Federated Department Stores Inc. and disappointing same-store sales, the company said.

Quarterly income dropped to $52 million, or 16 cents a share, in the three-month period ended July 30. That compares with $101 million, or 33 cents, a year earlier. Merger-related costs amounted to about 13 cents a share, while the divestiture of stores and a lowered tax reserve boosted earnings about 8 cents.

Analysts surveyed by Thomson Financial projected earnings of 31 cents a share.

Net sales totaled $3.45 billion last quarter, up 17% from $2.96 billion a year earlier. However, sales at stores open at least a year, a key measure of retail health, were down 1.6%.

In February, St. Louis-based May, which owns Robinsons-May, agreed to be taken over by Cincinnati-based Federated, owner of Macy’s and Bloomingdale’s, in a deal valued at nearly $11 billion. Shareholders of both companies approved the takeover last month. Federated expects the deal to close in the third quarter, after completion of regulatory review.