Published February 26, 2013
Saks (SKS) posted a decline in fourth-quarter profit on Tuesday as Hurricane Sandy slowed sales in November, however it still managed to top Wall Street expectations.
The New York-based luxury department store recorded net income of $20.4 million, or 13 cents a share, compared with a year-earlier profit of $37 million, or 21 cents.
Excluding one-time items such as impairment charges and store closing expenses, Saks said it earned 17 cents, topping average analyst estimates in a Thomson Reuters poll by two cents.
Revenue for the three months ended Feb. 2 grew 5.6% to $976.6 million compared with $925.1 million a year ago, trumping the Street’s view of $963.1 million. The 2012 fourth quarter contained an extra week compared with the year-earlier period.
Excluding that additional week, sales at stores open longer than a year, a key growth metric referred to as same-store sales, edged up 0.7%. The modest improvement is on top of a 7.7% improvement in the fourth quarter of 2011.
“As previously disclosed, our fourth quarter sales were negatively impacted by Hurricane Sandy which caused significant disruption to our very important Northeastern markets and to saks.com,” Saks CEO Stephen Sadove said in a statement.
The storm caused sales at Saks’s flagship store in New York City to lag company-wide performance. However, gross margin still improved slightly to 37.7% from 37.6% and beat Saks’s own expectations of a flat to a 50-basis point decline.
Looking into the future, Saks identified the need for a more omni-channel model, which it said will drive long-term profitability, but said that, along with a generally volatile market will likely place pressure on near-term profitability.
“We view 2013 as another transformational year,” Sadove said. “We are managing the business for the long-term and are committed to making investments that best position our company and the Saks Fifth Avenue brand for the future.”
For the current fiscal year, Saks anticipates same-store sales growth in the range of 3% to 5%.
Share of retail chain ticked up about 1.5% early Tuesday to $11.20.