Saks staggers under expense load
December 1, 2003-- Home Textiles Today,
Saks Inc. continued to struggle with its numbers in the third quarter. The retail company saw its expenses balloon as a percentage of sales, and posted a drop in its operating profit of 2.9 percent, to $182 million.
The company reported net income of nearly $12.4 million for the quarter, but this included a benefit from income taxes of $10.4 million as opposed to a provision of $1.2 million in the third quarter of 2002. Without these items, Saks' net dropped by more than 36 percent for this year's third quarter, to slightly less than $2 million.
Brad Martin, chairman and ceo, said the jump in the SG&A statistic reflected expenses associated with increased sales in existing and new stores, a reduction in the private-label credit card contribution and charges related to settling lease liabilities and severance. Inventories also rose at the various Saks stores, with both total and comp inventories rising 3 percent in the third quarter.
On the somewhat brighter side, sales for the Saks group rose 4.3 percent for the third quarter, reaching about $1.5 billion; and same-store sales rose 3.1 percent in the quarter. Leading the way was the Saks Fifth Avenue Enterprises sector, which pushed up sales by 6.4 percent (5 percent on a comp-store basis), to $601.1 million. The Saks Department Store Group saw sales rise by 3 percent overall and 1.8 percent on a same-store basis.
Martin also noted that the company as a whole was able to improve its gross margin percentage by 80 basis points in the quarter. Saks also slimmed down its year-over-year interest expenses by reducing borrowings and taking advantage of lower interest rates.
|Qtr. 11/1 (x000)||2003||2002||% chg|
|a: Includes a benefit based on income taxes of $10,392,000 for the third quarter of this year, compared with a provision of $1,154,000 based on income taxes for the third quarter of 2002. With out these benefits and provisions, Saks' third-quarter net income was $1,961,000, down 36.2% from $3,076,000 net income for the 2002 third quarter.
|Earnings per share||0.09||0.01||800.0|
|Average gross margin||38.9%||38.1%||—|
|Nine months||2003||2002||% chg|
|Earnings per share||0.01||-0.30||—|
|Average gross margin||37.8%||37.6%||—|