Luxury retailer Saks Inc. (SKS) on Tuesday said it swung to a profit in the third quarter led by improved gross margin performance and diligent expense control, despite a decline in comparable store sales. Further, the company updated its full year forecast and said it remains cautious in its near-term outlook.
The New York-based company's third-quarter net income was $1.93 million or $0.01 per share, compared to a loss of $43.7 million or $0.32 per share in the year-ago quarter.
Excluding the after-tax loss from discontinued operations of $12.9 million or $0.10 per share, the company reported a net loss from continuing operations of $30.8 million or $0.22 per share in the third-quarter of 2008.
On average, 9 analysts polled by Thomson Reuters expected the company to post a loss of $0.12 per share. Analysts' estimates typically exclude special items.
Quarterly net sales declined to $631.4 million from $690.3 million in the year-earlier quarter. Five Wall Street analysts had a consensus revenue estimate of $624.54 million for the quarter.
Comparable store sales for the most recent quarter dropped 10.1%, in line with the company's expectations.
The company noted that its Saks Fifth Avenue stores experienced continued weakness, though, several merchandise categories, such as women's designer sportswear and "gold range" apparel, outerwear, jewelry, and soft accessories, began to show relative strength toward quarter end. For the quarter, sales trends in the New York City flagship store were more in line with the company's aggregate comparable store sales decline.
Saks Direct posted about 26% comparable store sales growth during the quarter, as well as OFF 5TH's comparable store sales performance continued to show relative strength in the quarter.
During the recent quarter, gross margin rate was 40.3% compared to 35.7% in the same period previous year, driven by the controlled inventory levels and a disciplined promotional and clearance cadence.
Further, the company reduced year-over-year selling, general, and administrative or SG&A expenses by about $18 million in the third quarter. As a percent of sales, SG&A was 25.7% in the 2009 third quarter, compared to 26.2% in the year-earlier quarter.
For the nine-month period, the company reported net loss of $57.7 million or $0.40 per share, compared to a loss of $59.1 million or $0.43 per share in the prior-year period.
Loss from continuing operations widened to $57.4 million or $0.40 per share from $42.7 million or $0.31 per share in the comparable period of the previous year.
Net sales for the nine months ended October 31, 2009 were $1.82 billion, down from the previous year's net sales of $2.20 billion.
Looking ahead, the company expects fourth-quarter comparable store sales to decrease in high single digits. Due to prior year comparisons, November 2009 is expected to generate the weakest monthly comparable store sales performance in the fourth quarter, the company said.
Saks expects fourth-quarter net capital expenditures of about $10 million - $13 million for the fourth quarter, and other operating expenses are expected to total about $81 million in the fourth quarter.
Comparable store sales for the second half of the fiscal year is now estimated to decline in high single digits and of mid-double digits for the full fiscal year. Previously, the company had expected comparable store sales for the second half of the full year to decline in the mid-to-high single digit range, and a decline of low double digits for the full year.
Comparable store inventory levels are still estimated to decline in the low- to mid-teen percentage range at fiscal year end.
In addition, the company stated that it has planned inventory receipts down modestly, and expense containment will remain a priority for fiscal spring 2010. Saks has not finalized its capital plan for 2010, but the company expects net capital spending to approximate $40 million - $45 million next year, which primarily is its maintenance capital level and includes no new Saks Fifth Avenue stores or major renovations.
Stephen Sadove, Chairman and Chief Executive Officer of Saks, said, "Even though we remain cautious in our near-term outlook, we are positive about the future of our business and luxury retailing. We believe the actions we have taken and our current merchandising, service, marketing, and cost containment initiatives will position us to significantly improve our performance in the long term."
Among other players in the field, Macy's Inc. (M) posted a narrower loss for the third quarter totaling $35 million or $0.08 per share, compared to a loss of $44 million or $0.10 per share a year ago, reflecting strong sales at Bloomingdale's and "outstanding growth" in its Internet businesses. Net sales declined 3.9% to $5.28 billion from $5.49 billion in the previous year.
Reflecting improved margin and cost control initiatives, Dillard's Inc. (DDS) swung to a third-quarter profit of $8.0 million or $0.11 per share, compared to a net loss of $56.0 million or $0.76 per share last year. However, total revenues for the quarter decreased to $1.39 billion from $1.55 billion in the previous year.
Saks shares, which have been trading between $1.50 and $7.45 in the past 52 weeks, are currently trading at $6.90, up 49 cents or 7.64%.
For comments and feedback contact: editorial@rttnews.com
June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.