Saks net surges 66% on discounts
Saks Inc., the operator of luxury chain Saks Fifth Avenue, reported Tuesday a 66% increase in first-quarter earnings compared with year-ago results depressed by one-time charges. It said increased discounting hurt profit margins, however.
The New York-based retailer also warned that the challenging economic environment will continue for the rest of the year as even wealthier shoppers are feeling squeezed.
Saks (SKS) earned $18.27 million, or 13 cents per share, for the three months ended May 3. That compares with $11.04 million, or 7 cents per share, in the year-ago period. The year-ago period included 12 cents per share in one-time charges.
Revenues rose to $862.35 million compared with $792.75 million in the year-ago period. Same-store sales, or sales at stores open at least a year, rose 8.4%. Same-store sales are considered a key indicator of a retailer’s health.
Analysts surveyed by Thomson Financial expected higher profits of 17 cents per share in the latest period on lower revenue of $840 million http://us-no-fax-payday-loans.com. The estimates typically exclude one-time items.
Its shares fell 13 cents to $14 in premarket trading.
In a statement, Stephen I. Sadove, chairman and CEO, said the company made "great progress" in reducing and controlling its inventories and noted strong consumer reaction to its merchandise, but he expects that the retailer’s profit margin will remain relatively unchanged compared with 2007 given the increased discounting needed in the harsh environment. Saks had been aggressive with promotions including a more extensive Friends & Family event.
Saks forecast that same-store sales should be up in the low-single digits in the current quarter and mid-single digits in the second-half of the year. The company added that inventory levels are expected to remain in line with the company’s sales growth expectations throughout the year.
Filed under: legal by Wolf