• Swings to Q4 profit of $25m
  • Revenue rose 6.8% to $866.3m
  • “Moved from defense to offence”

Higher full-price sales and fewer promotions have helped upscale US department store operator Saks Incorporated swing to a fourth quarter profit.

The retailer reported a net income of $25m or $.14 per share in the three months to 29 January, against a loss of $4.6m or $0.03 per share last year.

Revenue rose 6.8% to $866.3m and same-store sales rose 8.4% in the quarter, thanks to strong demand for men’s and women’s apparel, handbags, and shoes in the Saks Fifth Avenue stores.

For the year, Saks reported a net income of $47.8m or $.30 per share, up from a loss of $57.9m or $.40 per share last time. Comparable store sales increased 6.4%.

Gross margins in the quarter rose 130 basis points year-over-year to 37.8%, while the full year gross margin rate was up to 40.1%, a rise of 350 basis points.

“We made significant investments in demand chain management systems, including Hold & Flow, focused on improving the allocation of merchandise to the stores,” said Stephen I Sadove, chairman and CEO.

“We installed an advanced robotics system for fulfilling Saks Direct orders which has increased productivity, improved space utilisation, and improved customer service. Approximately 40% of Saks Direct’s orders were being fulfilled on the new system by the end of 2010; the system is expected to be fully operational by mid-2011.”

Sadove added that the retailer “moved from defense to offence” and with improvement in the financial markets, “experienced a more stable and predictable operating environment in 2010.”

“We are cautiously optimistic about the overall tone of business and the way our customers are responding to our initiatives.”

The retailer, which operates 47 Saks Fifth Avenue stores, 57 Off 5th stores, and saks.com, said it expects comparable store sales to grow in the mid-single digit range for the full year.