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smaller-than-expected first-quarter loss, sending shares soaring 23% in morning trading.

But this surprise does not negate the fact that the high-end retailer has been one of the hardest hit chains during the recession. During the holiday season the company was forced to resort to deep discounts of more than 70% in order to attract consumers.

Saks' stock price has averaged approximately $2.89 per share since the beginning of 2009 and at one point this year reached an all-time low of $1.55 per share.

During the quarter, the company recorded a loss of $5.1 million, or 4 cents a share, compared with a profit of $17.3 million, or 12 cents, a year earlier. Analysts expected a loss of 26 cents a share.

Sales tanked 27% to $621.3 million from $850 million in the year-ago period, while same-store sales dropped 27.6%.

The company said Saks Fifth Avenue saw weakness across all merchandise categories, geographies, and channels of distribution during the quarter.

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Saks reiterated its full-year guidance, saying it expects same-store sales will decline by low double-digit percentages.

In recent weeks, Diego Della Valle, the founder of Italian luxury shoe and handbag maker Tod's SpA, become the company's second-largest shareholder.

On Monday, P. Schoenfeld Asset Management, which owns about 1.5% of the company's total shares, urged shareholders in a proxy letter to

make changes to Saks' board. The group claimed the department store's lackluster performance is not only due to economic difficulties but poor management.

Last week rival


(JWN) - Get Nordstrom, Inc. Report

posted a

32% decline in first-quarter profit , but raised its full-year outlook in anticipation of higher gross profit and an increase in credit-card revenue.

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