• Q1 profit slumped 37.8% to $20m
  • Sales rose 5.3% to $793.2m
  • CEO pleased with 5.9% comparable store sales growth

Luxury retailer Saks has today (21 May) posted a 37.8% decline in first-quarter net profit after it was weighed down by store closing costs and debt-extinguishment losses.

Net income, which included US$10.1m in store closing costs and a loss on debt extinguishment, stood at $20m for the three months to 4 May, compared with $32.1m in the same period last year. Adjusted net income reached $30.1m.

Sales rose 5.3% to $793.2m from $753.6m last year, driven by women's contemporary and advanced designer apparel.

Chairman and CEO Stephen Sadove said he was "pleased" with the 5.9% comparable store sales increase and flat gross margin of 44.4%.

"2013 is another important transformational year for Saks as we continue our omni-channel evolution. We are making strategic long-term investments in infrastructure and technology (Project Evolution) that will enable us to further enhance our omni-channel capabilities," Sadove added.

"These investments will continue to place pressure on our near-term profitability; however, we are taking the right actions and a long-term approach to the business. We are positioning our company for future revenue and earnings growth."

Looking ahead, the company expects comparable store sales growth of 4-6% for the balance of the year, with modestly higher growth in the second half of the fiscal year.

In addition, Saks expects to incur $5-6m in additional expenses related to Project Evolution and the same amount for the accelerated launch of its online outlet store.