Saks Inc. Breaks Even in 3Q
By Staff -- Home Textiles Today, 11/28/2005
Birmingham, Ala. — Picking up $10 million in insurance money for a New Orleans store damaged by Hurricane Katrina, Saks Inc. managed a break-even third quarter, recording a small profit of $225,000, compared with a year-before loss of $30.4 million, when the chain was hit by store closing costs during a sweeping overhaul of operations.
The insurance proceeds offset expenses of $4.5 million in asset impairment and costs stemming from the sale of Proffitt's and McRae's to Belk Stores.
Sales at the department store declined 11.2 percent, to $1.3 billion from $1.5 billion, reflecting the sale of Proffitt's and McRae's earlier this year. Same-store sales increased 2.7 percent, boosted by a strong performance at the upscale Saks Fifth Avenue unit.
Sales in the department store group, now being dismantled, fell 19.6 percent, to $681 million from $847 million last year, while same-store sales held steady, edging up 0.1 percent. Sales at the carriage-trade Saks Fifth Avenue business were steady at $635 million, held in check by hurricane damage, while same-store sales improved 5.4 percent.
Operating profits in the department store segment rose 250 percent, to $13.3 million from $3.8 million. But operating profits at Saks Fifth Avenue slumped 22 percent, to $16.7 million from $21.4 million.
| Qtr. 9/29 (x000) | 2005 | 2004 | % change |
| Sales | $1,315,218 | $1,481,645 | -11.2 |
| Oper. income (EBIT) | 145,577 | 164,283 | -11.4 |
| Net income | 225a | (30,390)a | – |
| Per share (diluted) | 0.00 | (0.22) | – |
| Average gross margin | 39.0% | 39.0% | – |
| SG&A expenses | 27.9% | 27.9% | – |
| Nine months | |||
| Sales | 4,180,529 | 4,372,195 | -4.4 |
| Oper. income (EBIT) | 423,369 | 511,209 | -17.2 |
| Net income | 24,590b | (35,555)b | – |
| Per share (diluted) | 0.17 | (0.25) | – |
| Average gross margin | 37.7% | 38.5% | – |
| SG&A expenses | 27.6% | 26.8% | – |
| (loss) a. Third quarter results include $9.4 million in impairment and dispositions costs, compared with a year-ago gain of $26.4 million; a $29,000 loss on the early retirement of debt; miscellaneous income of $1.2 million, compared with $472,000 the prior year and an income tax provision of $144,000 compared with a prior-year tax benefit of $13.4 million. b. Nine month results include a $169.3 million in asset impairment and disposition costs, compared with a year-ago gain of $33.8 million; a $19 million loss on the early retirement of debt; miscellaneous income of $6.4 million, compared with $2.9 million last year; and an income tax provision of $24.6 million, compared with a prior-year tax benefit of $16.4 million. |
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| Third quarter (x000) | 2005 | 2004 | % change |
| Department stores | |||
| Sales | $680,600 | $846,600 | -19.6 |
| Operating income | 13,300 | 3,800 | 250.0 |
| Saks Fifth Avenue | |||
| Sales | 634,600 | 635,100 | 0.1 |
| Operating income | 16,700 | 21,400 | -22.0 |
| Nine months | |||
| Department stores | |||
| Sales | 2,250,100 | 2,474,800 | -9.1 |
| Operating income | |||
| Saks Fifth Avenue | |||
| Sales | 1,930,400 | 1,897,400 | 1.7 |
| Operating income | 14,700 | 60,800 | -75.8 |
