US: Saks swings to better-than-expected Q1 loss
Upmarket retailer Saks Inc today (19 May) reaffirmed its sales and margin outlook for the year despite swinging to a first quarter loss.
The New York based retailer said its net loss was $5.1m, or $.04 per share, compared with a profit of $17.3m, or $.12 per share, in the same period last year.
But chairman and CEO Stephen I Sadove, said the performance "exceeded expectations" after the firm watched its inventories, expenses, and capital spending.
Revenues for the three months to 2 May tumbled 27% to $621.3m, from $850m a year earlier, while same-store sales dropped 27.6%.
The company said its 53 Saks Fifth Avenue stores experienced continued weakness across all merchandise categories, geographies, and channels of distribution - while Saks Direct posted a 14.6% drop in comparable store sales.
However, its 52 Off 5th outlet stores saw "relative strength" in same-store sales performance.
Gross margins rose by 40 basis points in the quarter, despite the negative impact of higher promotional markdowns and clearance events.
Selling, General, and Administrative expenses (SG&A) were down by 22%, with Saks saying it now expects to shave $60m off total SG&A expenses in 2009 compared with earlier estimates of a $20m to $30m reduction.
Capital spending was $28m, and management expects this to total $55m for the full fiscal year.
In its outlook for the rest of the year, the retailer said it sees comparable store sales down in the low double digit range.
It also expects capital expenditures of $55m for the year, a reduction of $75m from prior-year levels.
In January, Saks slashed 1,100 corporate support and store jobs - around 9% of the total company workforce - in a bid to cut costs, and also axed performance-based wage rises in 2009.
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