Saks Earnings Jump

Numbers beat targets.
Author:
Publish date:

Department-store operator

Saks

(SKS)

said its third-quarter earnings jumped.

The company earned $6.2 million, or 5 cents a share, in the quarter ended Oct. 28, compared with $225,000 or less than a penny a share, a year ago. Earnings from continuing operations were $12.5 million, or 9 cents a share, in the quarter, compared with a loss of $13.5 million, or 10 cents a share, in the year-ago period. Other unusual items reduced earnings by 2 cents a share. On that basis, analysts surveyed by Thomson First Call were expecting earnings of 3 cents a share.

Third-quarter revenue rose 8% from a year ago to $697 million as against analysts estimate of $805.7 million. Same-store sales increased 8.8%.

The company expects its same-store sales to increase in the mid-single digit percentage range for the fourth quarter.

Gross profit in the quarter increased 10.8% to $292.4 million, while gross profit margin improved 110 basis points to 42%.

"For the quarter, comparable store sales increased 8.8%, and the gross margin rate rose 110 basis points over last year, due to improved sell-throughs of full priced merchandise. Year-over-year SG&A expenses declined approximately $26 million, or 13%, driving a 610 basis point improvement in the expense rate as a percent of sales. We estimate that about one-half of the expense reduction is due to expense leverage at SFAE and continued progress on our corporate infrastructure downsizing. The balance of the decline was attributable to the elimination or reduction of items that we do not expect to be long-term continuing obligations such as investigation expenses, severance/retention expenses, and insurance deductible expenses related to the New Orleans store," the Birmingham, Ala.-based company said.

The company completed the sale of its Saks Department Store Group Proffitt's/McRae's business to

Belk

in July 2005, the sale of its Northern Department Store Group business to

Bon-Ton Stores

in March, and the sale of its Parisian business to Belk in September.

Saks is now left with Saks Fifth Avenue Enterprises and Club Libby Lu.

Saks said it plans to pay $4 a share special cash dividend to its shareholders totaling about $550 million. The special dividend is payable Nov. 30 to shareholders of record as of Nov. 15.

The shares of the company were trading up 41 cents, or 2.06%, at $20.30 Tuesday.

This story was created through a joint venture between TheStreet.com and IRIS.