Upscale department store retailer Saks said Monday that profit slid 86% in the first quarter from a year-ago period that included hefty gains on the sale of its Saks Department Store Group businesses.
Saks , which currently operates Saks Fifth Avenue, is comprised of 54 Saks Fifth Avenue stores, 49 Saks Off 5th stores, and saks.com. The company also operates Club Libby Lu specialty stores.
Net income for the three months ended May 5 declined to $11 million, or 7 cents per share, from $77.9 million, or 57 cents per share, in the year-ago period, which included a gain of $66.2 million on the sale of certain department stores, among other items.
Saks said the latest quarter includes restructuring costs of 9 cents per share, legal costs of a penny per share related to ongoing investigations by the Securities and Exchange Commission and the U.S. Attorney's Office for the Southern District of New York, and a loss on debt repayment of 2 cents per share.
Excluding these items, Saks would have reported profit of 19 cents per share in the latest first quarter.
Sales grew 16% to $792.7 million from $684.1 million last year. Analysts surveyed by Thomson Financial were looking for profit of 16 cents per share on revenue of $787 million.
"Sales performance was solid across all geographies," said chairman and CEO Steve Sadove. He noted performance was strong in Saks' New York flagship store and most other major locations.
In a key measure for retailers, sales at stores that had been open for at least one year were up 14.4 percent from the same period last year, indicating what Sadove called "significant progress in refining and strengthening our merchandise assortments."
"We are pleased with the substantial improvement in operating income for the first quarter which primarily was driven by strong comparable store sales growth and solid expense management," Sadove said in a statement.
Over the past two years, Saks shed its mid-brow department stores to concentrate on its Saks Fifth Avenue business, which includes its outlet stores and online division. Saks Fifth Avenue - which had struggled with the wrong fashion formula that skewed too young - aims to reclaim its status with the well-heeled with a makeover. It's rebuilding its store label fashions, investing in classic brands and better tailoring its stores to meet specific markets. Formerly based in Birmingham, Ala., Saks transferred its headquarters to New York at the end of April, said spokeswoman Julia Bentley.