May Company Posts Q2 Loss on Divestiture Costs

The May Department Stores Company saw a net loss per share of 39 cents for the 13 weeks ended Aug. 2, 2003, compared with earnings per share of 22 cents in the similar period a year ago. Net loss was $110 million, compared with net earnings of $69 million the prior year. Second quarter 2003 results include a charge of $318 million, or 69 cents per share, for asset impairment and other costs related to the recently announced divestiture of 34 stores. Excluding these costs, second quarter 2003 earnings were $92 million, or 30 cents per share. Second quarter 2002 earnings include $59 million, or 12 cents per share, of division combination costs. Excluding this charge, second quarter 2002 net earnings were $106 million, or 34 cents per share.

Second-quarter net sales were $3.00 billion, a 1.0% decrease, compared with $3.03 billion in 2002. Store-for-store sales decreased 3.1% for the quarter.

For the six months ended Aug. 2, 2003, net loss per share was 16 cents, compared with earnings per share of 45 cents in 2002. Net loss was $38 million versus net earnings of $139 million a year ago.

Results for the first six months of 2003 include store divestiture costs of $318 million, or 69 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. Results for the first six months of 2002 include division combination charges of $99 million, or 20 cents per share.

Net sales for the first six months of 2003 were $5.87 billion, a 4.1% decrease, compared with $6.13 billion in the similar 2002 period. Store-for-store sales decreased 6.0% for the first half of fiscal 2003.

During the 2003 second quarter, the company announced its intention to divest 32 Lord & Taylor stores, a Famous-Barr store, and a Jones Store location. When the divestitures are completed, the company expects to save approximately $50 million, or 10 cents per share, annually.

              THE MAY DEPARTMENT STORES COMPANY AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED RESULTS OF OPERATIONS
                                 (unaudited)

                                       13 Weeks Ended
                              Aug. 2, 2003          Aug. 3, 2002

    (millions, except                 % to                  % to
      per share)              $    Net Sales      $      Net Sales

    Net sales             $ 3,000              $3,030

    Cost of sales:
     Recurring              2,118    70.6%      2,119      69.9%
     Restructuring
      markdowns                --     0.0          20       0.7

    Selling, general, and
     administrative expenses  657    21.9         657      21.7
    Restructuring costs       318    10.6          39       1.3

    Interest expense, net      80     2.7          86       2.8

    Earnings (loss) before
     income taxes            (173)   (5.8)        109       3.6

    Provision (credit) for
     income taxes             (63)   37.0*         40      36.6*

    Net earnings (loss)     $(110)   (3.6)%       $69       2.3%
    Diluted earnings
     (loss) per share      $(0.39)              $0.22

    Excluding restructuring
     costs:
     Net earnings             $92     3.1%       $106       3.5%
     Diluted earnings
      per share             $0.30               $0.34

    Dividends paid
     per common share       $0.24              $ 0.23-3/4