Saks: down $26M in Q2
Brent Felgner -- Home Textiles Today, August 25, 2003
With margins thinning out in a promotional environment, costs climbing higher and same-store sales slipping, department store retailer Saks Inc. recorded a sharply widening second-quarter loss of $25.8 million, deeper by more than a fourth than a year-ago deficit of $20.4 million.
Sales at the retailer — parent of Saks Fifth Ave as well as Proffitt's, Younkers and Carson Pirie Scott — were virtually flat at $1.2 billion. But same-store sales dipped by 0.6 percent as weakening comps at the department store group, down 1.7 percent, offset a 1.0 percent increase at Saks Fifth Ave.
Taking a bite out of the bottom line, average gross margin thinned under markdown pressure, declining by 20 basis points, or two-tenths of a percentage point, to 36.5 percent from 36.7 percent a year ago. Adding another layer of pressure, costs jumped up by about $10 million, or 3.1 percent, to $327.3 million from $317.5 million last year. The extra $10 million in operating costs, the retailer said, stemmed from a $16 million reduction in credit contribution after the retailer sold its credit card business to Household International. Excluding the credit contribution, the retailer said, costs actually dropped from year-before levels.
Acting as an offset to some of the operating weakness, the retailer posted a gain of $2.7 million tied to the sale of closed stores. In a further boost to the bottom line, Saks recorded an income-tax credit of $14.8 million resulting from earlier losses.
Sales in the department store group slipped by 0.6 percent in the second quarter, to $750.8 million from $755.4 million last year, but operating profits, under markdown pressure, tumbled by 30.5 percent. Saks Fifth Avenue posted a widening loss of $22.1 million from $13.8 million last year, even though sales improved slightly, rising by 0.9 percent to $486.3 million.
|Qtr. 8/2 (x000)||2003||2002||% change|
a-Second-quarter results include integration charges of $70 million; a $4.2 million gain from long-lived assets; miscellaneous expense of $76 million vs. miscellaneous income of $196 million in the year-ago quarter; and a $14.8 million income-tax benefit, compared with a prior-year tax benefit of $12.2 million.
b-Six-month results include integration charges of $535 million; a gain from long-lived assets of $2.0 million, compared with a prior-year loss of $926,000; miscellaneous income of $5.0 million vs. $581,000 last year; and an income-tax benefit of $6.5 million vs. $113,000 a year ago. The year-ago six months included $709,000 gain on the retirement of debt.
|Oper. income (EBIT)||36,670||50,867||-27.9|
|Per share (diluted)||(0.18)||(0.14)||—|
|Average gross margin||36.5%||36.7%||—|
|Oper. income (EBIT)||139,437||167,405||-16.7|
|Per share (diluted)||(0.08)||(0.02)||—|
|Average gross margin||37.2%||37.4%||—|
|Qtr. 8/2 (x000)||2003||2002||% chg|
|Saks Department Stores|
|Saks Fifth Avenue|
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