Saks Bags a Big Quarter

Shares surge after the retailer's sales top expectations.
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Shares of

Saks

(SKS)

surged Wednesday after the luxury retailer reported that it swung to a fourth-quarter profit on stronger-than-expected sales.

The stock was climbing $1.43, or 7.6%, to $20.17 in recent trading.

The Birmingham, Ala.-based company reported net income of $21.5 million, or 14 cents a share, compared with a loss of $2.2 million, or 2 cents a share, a year earlier.

The latest quarter's results included several one-time items related to the disposition of the company's department store group, accounting adjustments and legal costs.

Analysts polled by Thomson Financial projected earnings of 22 cents a share, though those forecasts typically exclude one-time items.

Sales increased 17% to $955 million, handily beating Wall Street's target of $920.5 million. Same-store sales, or stores open at least a year, jumped 9.9%.

"We are pleased with the significant increase in operating income for the quarter which was driven by strong comparable store sales, substantial improvement in the gross margin rate, and solid expense management," CEO Steve Sadove said in a statement. "Traffic, number of transactions, and average ticket trends all improved for the quarter, and nearly all merchandise categories and geographies performed very well during the period."

Separately, Saks said same-store sales for February surged 24.7%. Total sales increased 26.5% to $220 million.

The company said its core Saks Fifth Avenue business generated strong sales across most merchandise categories.

Some of the strongest areas were women's designer apparel, shoes, handbags, fine jewelry and accessories, as well as men's apparel, shoes and accessories. February revenue also was helped by full-price selling on new spring items and an end-of-season consolidation sale in certain stores, Saks said.

Saks forecast percentage growth of same-store sales in the low double digits in the spring and mid-to-high single digits in the fall.