• Swings to Q1 net income
  • Sales up 6.9%
  • Optimistic outlook

US department store Saks has posted a first quarter profit, saying it has moved from "defence to offense".

For the first quarter ended 1 May, the company recorded net income of US$18.8m, compared to a net loss of $5.1m in the same period last year.

Saks reported that Q1 sales were $667.4, from $624.3 in the prior year, showing an improvement of 6.9%, or 6.1% in same-store sales.

Stephen I Sadove, chairman and CEO of the company, said: "I am very pleased with our first quarter operating performance. These results exceeded our expectations and were driven by comparable store sales growth, gross margin expansion, and expense leverage.

"The Saks team has carefully navigated through the challenging environment, and we are now moving cautiously from defense to offense.

Saks Direct posted an approximate 33% sales increase in the quarter.

Consolidated inventories were $702.1m, a 9.9% decrease over the prior year. Inventories decreased 10.3% on a comparable stores basis.

Sadove added: "We remain optimistic about the long-term outlook for our company and for the luxury sector as a whole.

"While our first quarter results exceeded our expectations, we still believe the overall environment remains uncertain, and we are approaching the remainder of 2010 with continued caution. However, our assumptions for the balance of the year reflect a somewhat stronger forecast than we had at the beginning of the year."