Saks (NYSE:SKS) reported mixed third-quarter results on Tuesday but remained cautious on the current quarter citing an uncertain macroeconomic environment and negative impacts related to Hurricane Sandy.
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The luxury department store forecast flat sales at stores open longer than a year for the critical holiday period due to a soft early November related to the super storm that ravaged the East Coast two weeks ago.
Stores amounting to about 40% of Saks’ total revenue were directly impacted by the storm, while online sales also slumped due to a decline in demand in the Northeast. When including a number of stores that were indirectly affected by Sandy, Saks estimates that about 55% of its total revenue base was in some way hit by the multi-billion-dollar hurricane.
The New York-based operator of the Saks Fifth Avenue upscale retail chain posted third-quarter net income of $22.6 million, or 14 cents a share, compared with a year-earlier profit of $17.7 million, or 11 cents.
Excluding a one-time charge related to the reversal of $3.3 million in Federal income tax reserves, Saks said it earned 12 cents, matching average analyst estimates in a Thomson Reuters poll.
Revenue for the three months ended Oct. 27 climbed 3% to $713.2 million from $692.3 million a year ago, missing the Street’s view of $726.1 million. Same-store sales, a growth metric for retailers that measures sales at stores open longer than a year, grew 3.3%.
“In spite of the continued uncertain macro environment, we were pleased to post a modest year-over-year increase in operating income and net income for the third quarter,” Saks CEO Stephen Sadove said in a statement.
The year-over-year improvements were led by stronger demand in the women’s and men’s contemporary apparel, shoes, handbags, fine jewelry and fragrances segments.
The slow economic recovery and high costs related to an increase in targeted promotional spending, however, led to a slight decline in gross margin to 43.9% from 44.2% in the equal 2011 period.