Slow sales lead to 1Q loss for Saks
One-time charge also contributes to $25M loss
By Don Hogsett -- Home Textiles Today, 5/27/2002 12:00:00 AM
BIRMINGHAM, AL —
Held in check by a slump in sales and a $46 million one-time accounting charge, Saks Inc. recorded a first-quarter loss of $25.4 million, compared with a $26.5 million profit the year before.
Further clouding the bottom line, earnings last year included a $10.6 million gain from the early retirement of debt. Pulling out all the one-time items from both years, profits in the opening quarter jumped up by 24.6 percent, to $19.8 million from $15.9 million.
Sales at the retailer — the parent of Saks, McRae's, Younkers, Parisian, Proffitt's, Herberger's, Carson Pirie Scott, Bergner's and the Boston Store — slipped by 2.6 percent, to $1.4 billion from $1.5 billion a year ago. Same-store sales edged up by 0.5 percent, with a 1.0 percent increase at department stores offset by a 0.1 percent decline at the Saks Fifth Avenue business.
Soft as they were, same-store sales at Saks "exceeded those of our traditional and luxury department store peers," said Brad Martin, chairman and ceo.
In a lift to the bottom line, the diversified retailer expanded its margins while shaving its costs. SG&A expenses declined by 3.0 percent, to $332.8 million from $343.2 million last year, a cash savings of $10.5 million. Measured as a percentage of sales, costs were lower by 10 basis points, to 23.3 percent from 23.4 percent the previous year.
Average gross margin improved by 30 basis points, to 37.6 percent from 37.3 percent. But given the lower level of sales, gross margin dollars were off by 1.8 percent, to $536.9 million from $546.6 million. Helped by lower costs and wider margins, which offset the lower sales rate, the retailer recorded an operating profit of $62.3 million, up 3.7 percent. In a further lift to profits, the company said that consolidated quarter-end inventories were down by about 10 percent on a comp-store basis.
|Qtr. 5/4 (x000)||2002||2001||% change|
a-First-quarter results include $926,000 loss from long-lived assets, compared with a year-before gain of $312,000; a $443,000 gain on the early retirement of debt, compared with a year-ago gain of $10.6 million; and a $45.6 million charge stemming from a change in accounting.
|Oper. profit (EBIT)||62,303||60,078||3.7|
|Per share (diluted)||(0.17)||0.18||—|
|Average gross margin||37.6%||37.3%||—|
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