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Belk Dives into Red Ink

Taking a goodwill impairment charge of more than $300 million for fiscal 2009 (ended Jan. 31, 2009), department store operator Belk, Inc. plunged to a $213.0 million net loss for the year — down from net profit of $95.7 million in the year prior.

Belk noted that excluding non-comparable items such as the impairment charge, the result for the year ended January 31 would be "net income of $53.1 million."

"The charge, which resulted from a required annual impairment evaluation under generally accepted accounting principles (GAAP), eliminates goodwill from previous acquisitions but will not affect the company's business operations, cash flows or compliance with financial covenants under its debt agreements," the 307-store retailer stated.

Belk saw sales fall 8.5% to $3.49 billion in 2008, with comps down 8.7%.

In a statement, Tim Belk, chairman and ceo of the closely-held company, pointed to some positive items: "We responded to declining sales with an aggressive focus on managing inventories, expenses and capital expenditures. This enabled us to maintain our margins, reduce expense by $35 million and generate in excess of $250 million in cash flows from operations. We ended the year with $260 million in cash and no borrowings against our credit line."

Having opened eight new stores and expanded five during 2008, Belk plans to open three and expand three this year.

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