Saks Disappointed with SDSG's Quarter

Birmingham, Ala. — Saks Department Stores Group generated lower-than-expected gross margin and showed poor performance during the third quarter, despite solid sales in key private brands such as Jane Seymour Home and Laura Ashley, stated executives from parent company Saks Inc. during its third quarter conference call.

“Third quarter sales and gross margin performance led to disappointing operating results of the (SDSG) segment,” said Stephen Sadove, vice chairman and chief operating officer. “The deterioration in our department store group sales trend that began in the second quarter continued throughout the third quarter, resulting in a 2.6 percent third quarter comp-store sales decline.”

R. Brad Martin, chairman and CEO, added that the period's “bright spots” included better women's apparel, with some private brands in this category stronger than others. “But we experienced continued weakness in home furnishings and kids and moderate sportswear,” he said.

Sales for the quarter were especially challenging in the northern states, Sadove explained, due to unseasonably warm weather and a soft economy. The Southeastern state-based units also suffered during the period from hurricanes, which caused about $7 million in lost revenue, or 90 basis points, for the quarter.

Inventories ended the quarter at $1.86 billion, a 5.8 percent increase over the third quarter of 2003. Comparable-store inventories increased approximately 4 percent over last year.

Hoping to buoy SDSG are recently implemented supply chain initiatives “aimed at developing enhanced decision-making tools and business processes to improve the productivity of our inventory investment,” Sadove said.