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Saks Chief optimistic about future of luxury retailing
19
Nov '11
Retailer Saks Incorporated announced results for the third quarter and nine months ended October 29, 2011.

Overview of Results for the Third Quarter and Nine Months Ended October 29, 2011

For the third quarter ended October 29, 2011, the Company recorded net income of $17.8 million, or $.11 per diluted share.

For last year's third quarter ended October 30, 2010, the Company recorded net income of $36.3 million, or $.20 per diluted share. Those results included a $26.7 million, or $.14 per share, gain related to the reversal of certain estimated income tax reserves deemed no longer necessary. Excluding this gain, the Company would have recorded net income of $9.7 million, or $.06 per share, for the third quarter ended October 30, 2010.

For the nine months ended October 29, 2011, the Company recorded net income of $37.8 million, or $.24 per diluted share. Those results included after-tax charges totaling $2.9 million, or $.01 per share, comprised of:
• a pension and related benefit charge, a third-party receivable write-down, and an asset impairment charge totaling $1.8 million,
• $1.8 million of store closing expenses,
• a $0.3 million loss on debt extinguishment (related to the early retirement of approximately $1.9 million of senior notes) and
• a reversal of approximately $1.0 million in state income tax reserves deemed no longer necessary.

Excluding these after-tax charges, the Company would have recorded net income of $40.7 million, or $.25 per share, for the nine months ended October 29, 2011.

For the prior year nine months ended October 30, 2010, the Company recorded net income of $22.9 million, or $.14 per diluted share. Those results included a net after-tax gain totaling $13.9 million, or $.08 per share, comprised of $12.8 million of net lease termination, severance, and other store closing costs netted against the aforementioned gain of $26.7 million related to the reversal of certain estimated income tax reserves. Excluding these items, the Company would have recorded net income of $9.0 million, or $.06 per share, for the nine months ended October 30, 2010.

Comments on the Third Quarter and Nine Months Ended October 29, 2011
Stephen I. Sadove, Chairman and Chief Executive Officer of the Company, noted, “I am very pleased with the improvement in our operating performance for the third quarter and nine months ended October 29, 2011.

“Our 5.8% comparable store sales increase for the third quarter was achieved in spite of further reductions in our promotional activity. I am especially pleased with our 160 basis point improvement in our third quarter gross margin rate.” Comparable store sales grew 10.3% for the nine months.

In the Saks Fifth Avenue stores, several merchandise categories showed strength during the quarter, including women's contemporary apparel; women's shoes; handbags; jewelry; and men's apparel, shoes, and accessories. The New York City flagship store sales performance was in line with the Company's aggregate comparable store sales performance during the quarter.

Saks Direct posted approximate 24% and 31% comparable store sales increases for the third quarter and nine months, respectively. OFF 5TH's comparable store sales performance was below the Company's aggregate comparable store sales performance for both the quarter and nine months.

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Saks Incorporated

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