Better gross margins and tighter cost controls have helped upmarket department store retailer Saks Incorporated narrow its fourth quarter losses, offering some hope that high-end shoppers are starting to spend again.
“We remain optimistic about the long-term outlook for Saks Fifth Avenue and for the luxury sector as a whole,” said chairman and chief executive officer Stephen I Sadove.
“We believe there is more stability and predictability in our business compared to this time last year.”
The firm, which operates 53 Saks Fifth Avenue stores and 55 Off 5th stores, posted a loss of $4.6m or $0.03 a share, for the three months to 30 January. Excluding one-off costs, Saks would have had earnings of $0.06 a share.
This compares with a loss of $99.7m or $0.72 per share, in the same period a year earlier.
The retailer managed to offset lower sales by taking tight control of inventory levels and promotions – which helped lift gross margins to 36.5% in the quarter from 21.2% last year.
Comparable store sales declined 4.8%, but were in line with expectations the company said, although its online Saks Direct business saw comps jump 23%.
Strongest merchandise categories included women’s designer sportswear, handbags, shoes, and jewellery.
For the full year, net loss narrowed to $57.9m or $0.40 per share, versus last year’s loss of $158.8m or $1.15 per share. And comparable store sales fell 14.7%.
Looking ahead, Sadove said Saks is approaching 2010 “with continued caution” as the overall environment remains “somewhat uncertain and challenging.”
The company expects comparable sales growth in the low-to-mid single digit range for the full year, with better performance in the second half of the year than the first half.
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