Department store operator Saks Inc has narrowed its second quarter net loss to US$24.6m on the back of increased sales.

For the prior year period the company recorded a loss from continuing operations of $53.1m including after-tax items totalling $18.1m. Saks recorded a net loss of $13.6m for the six month period, lower than the $41.4m posted in the comparable period last year.

Sales increased 15% to $694m for the quarter and increased 13.2% on a same-store basis.

The retailer's second quarter losses, however, included after-tax items totalling $4.3m related to the company's downsizing and consolidation following the disposition of its SDSG businesses.

Stephen Sadove, chairman and CEO, said the company's improved operating performance in the second quarter was driven by strong comparable store sales growth, substantial gross margin rate expansion, and meaningful expense leverage.

"Our second quarter comparable store sales increase of 13.2% indicates that our customers are responding to our focused merchandise assortments as well as our customer service and marketing initiatives," he said.

Best performing categories were men's apparel, accessories, and shoes; women's contemporary and designer sportswear; and women's shoes; and handbags.

The company also said its Saks Direct outpaced the company average with a 40% sales increase over last year's second quarter. Off 5th outlet stores "was another bright spot" helped by additional private brand product.

Sadove added: "I remain optimistic about the long-term potential of the luxury sector and the Saks Fifth Avenue business. I believe that we can achieve an operating margin of approximately 4% this year (2007) and expand the operating margin to approximately 8% in the next three years or so."