Saks Post Quarterly Profit Versus Year-Ago Loss

Upscale retail chain Saks reported a quarterly profit on Wednesday, reversing a year-earlier loss, helped by better-than-expected sales, higher store traffic and cost controls.

The operator of Saks Fifth Avenue stores earned $21.5 million, or 14 cents a share, in the fourth quarter, compared with a year-earlier loss of $2.2 million, or 2 cents a share.

The latest quarter included an extra week.

The company said results were helped by a 9.9% rise in sales at stores open at least a year, gross margin improvement and cost controls.

Quarterly sales rose about 17% to $955 million.

Saks, which sells high-end brands such as Gucci and Chanel, said it was selling more full-priced merchandise, and customer traffic and the average sale improved during the quarter.

Gross margin improved to 37.9% of sales from 33.6% a year earlier.

Saks said it believes an 8% operating margin could be reached within the next three years. For 2007, it said operating margin excluding certain items should approach 4%.

The company said sales at stores open at least a year rose 24.7% in the four weeks ended March 3.