Smaller Saks Struggles for Sizzle
Don Hogsett -- Home Textiles Today, March 6, 2006
Birmingham, Ala. —Weighed down by weakness at its flagship Saks Fifth Avenue Stores, Saks Inc. recorded a fourth quarter loss of $2.2 million, compared with a year-before profit of $96.6 million. Operating profit at swank Saks Fifth Ave. was slashed by 86.9%, tumbling to $7.6 million from $58.0 million last year.
Tugging at the bottom line was $56.3 million in goodwill and other charges tied to the earlier sale of the retailer's Proffitt's and McRae's divisions as part of a broad sell-off of its department store holdings.
There was some good news. With the department store sell-off, sales dropped off by 14.2% during the all-important Christmas quarter, to $1.8 billion from $2.1 billion last year — but the crucial gauge of same-store sales climbed 1.9%. Department stores outpaced S5A in operating profit, down 4.0%, compared with the slide of almost 90% at Saks Fifth Ave.
The retailer said it plans to pay out a special $4 per share dividend after completing the sale of its northern department store group to Bon Ton Stores for $1.1 billion and a debt assumption of $85 million.
|Qtr. 1/28 (x000)||2005||2004||% change|
a. Fourth quarter results include a $12.9 million asset impairment charge, compared with $2.8 million during the same period last year; a $51.5 million goodwill impairment charge; and a $355,000 loss on the early retirement of debt.
b. 12-month results include a $2.1 million asset impairment charge, compared with $12.1 million a year ago; a goodwill impairment charge of $51.5 million; a $29.4 million loss on the early retirement of debt. Prior-year results included a $156.3 million gain on the sale of stores.
|Oper. income (EBIT)||238,448||315,950||-24.5|
|Per share (diluted)||(0.02)||0.71||—|
|Average gross margin||35.8%||36.8%||—|
|Oper. income (EBIT)||662,146||827,159||-19.9|
|Per share (diluted)||0.16||0.42||—|
|Average gross margin||37.1%||37.9%||—|
Fourth Quarter Segment Results
|Sales – Qtr. 1/28 (x000)||2005||2004||% change|
|Saks Department Stores||$970,777||$1,225,192||-20.8|
|Saks Fifth Avenue||802,046||839,890||-4.5|
|Operating Income – Qtr. 1/28||2005||2004||% change|
|Saks Department Stores||119,431||124,461||-4.0|
|Saks Fifth Avenue||7,591||58,037||-86.9|