Saks profits jump 50 percent
May 24, 2004-- Home Textiles Today,
Boosted by a double-digit gain in sales, wider margins and lower interest expense, department-store retailer Saks Inc. pushed first-quarter profits up a heady 52.6 percent, to $22 million from $14.4 million last year.
Sales advanced 11.5 percent, to $1.5 billion from $1.4 billion last year. With sales improving for full-price retailers virtually across the board in recent months, same-store sales climbed an impressive 10.2 percent.
The biggest gainer was the retailer's tony Saks Fifth Avenue nameplate, where overall sales shot up 17.1 percent, to $682 million from $583 million last year. Same-store sales at the higher-margin franchise scored a big 15.3 percent increase.
Sales at the Saks Department Store Group — including such marquee names as Proffitt's, Younkers, Carson Pirie Scott and McRae's — rose at a more modest, but still respectable, pace of 6.4 percent, to $858 million from $799 million.
Saks Fifth Avenue was a big winner at the bottom line as well, driving operating profits higher 48.1 percent, to $48.8 million from $33 million the preceding year. Department store profits swelled 13.7 percent, to $27.9 million from $24.5 million during the same period a year ago.
Fueling the bottom-line growth, in addition to the stronger sales, average gross margin widened 130 basis points, or 1.3 percentage points, to 39.1 percent from 37.8 percent a year ago. Gross margin dollars, helped by sales and margin growth, climbed 15.1 percent, to $601.6 million from $533.7 million.
But somewhat offsetting stronger margins, operating costs increased 90 basis points, or nine-tenths of a percentage point, to 25.1 percent of sales from 24.2 percent the prior year.
R. Brad Martin, chairman and CEO, said private-label sales in the department store group "grew at a 30 percent rate, achieving a sales penetration in excess of 15 percent. Total differentiated merchandise offerings reached 34 percent of sales for the quarter, versus approximately 26 percent in the same period last year. We enjoyed particularly strong sales in better sportswear, accessories, cosmetics, men's furnishings and soft home."
|Qtr. 5/1 (x000)||2004||2003||% chg|
|a-First-quarter results include $212,000 in pre-opening costs, down from $1.2 million during the same period a year ago; a $4.1 million loss from long-lived assets, compared with a prior-year loss of $2.3 million; and miscellaneous expense of $99,000, compared with $5.1 million in miscellaneous income the year before. Results in the prior-year quarter include an integration charge of $465,000.
|Oper. income (EBIT)||214,467||187,623||14.3|
|Per share (diluted)||0.15||0.10||50.0|
|Average gross margin||39.1%||37.8%||—|
First quarter segment results
|Saks Dept. Store Group|
|Saks Fifth Avenue|