Falling margins spawn red ink at Belk
November 30, 2007-- Home Textiles Today,
Charlotte, N.C. – Southern regional department store chain Belk saw last year’s third-quarter profit of $23.1 million swing to a net loss of $6.9 million this year, a result it allayed to a crunch in gross margins.
The complete explanation included: “a decrease in gross margin as a result of taking accelerated markdowns in response to unseasonable weather and a softening sales environment during the period, higher interest expense, and gains in the prior period related to the sale of investments and property insurance settlements resulting from Hurricane Katrina.”
While overall sales grew 1.8% to $808.3 million in the most recent period, comp store sales fell 4.4%.
The year-to-date sales picture is much brighter, and the earnings view is at least in the black. Sales for the first nine months are up a healthy 13.8% to $2.59 billion, with a comp sales increase of 0.2%. Earnings for the period are $10.1 – or $15.7 million excluding non-comparable items – against last year’s $60.8 million through three quarters.
Belk, with a store count now of 303, is still working through its Parisian acquisition. On Sept. 12 it officially re-opened 25 Parisian stores (acquired from Saks Inc. in October 2006) under the Belk nameplate.
The company is investing about $108 million in renovations and expansions of the stores, most of which have added full line home departments.
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