Bear Stearns upgraded shares of

May Department Stores

(MAY)

on Tuesday, citing improving trends in women's apparel, store traffic, inventory and expense controls.

Analyst Christine K. Augustine raised her rating on the stock to peer perform from underperform, but she maintained her 2003 and 2004 earnings estimates of $1.80 and $2.05, respectively.

Wall Street's consensus forecast is $1.78 for 2003 and $1.96 for 2004.

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Women's sportswear sales are improving and turned positive over the last six weeks at May, Augustine said. Traffic fell slightly in the second quarter and turned positive in July, compared with a decline of 5% in the first quarter, the analyst said.

Augustine also believes that same-store sales are ahead of plan for a low- to mid-single digit decline in the month of August.

On Tuesday, the company

posted a second-quarter loss on charges related to store closings. Shares of May were recently up 2.4% at $27.01 in

New York Stock Exchange

trading.