Falling Margins Spawn Red Ink at Belk
December 17, 2007-- Home Textiles Today,
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, comps fell 4.4%.
The year-to-date sales picture is brighter, and the earnings view is in the black. Nine-month sales 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 303 stores, is digesting 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 $108 million in renovations of the stores; most have added full-line home departments.