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Saks Inc. Breaks Even in 3Q

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.

Saks Inc.

Qtr. 9/29 (x000) 2005 2004 % change
(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.
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%


Saks Segment Results

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


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