Saks posts 9.5% comparable store sales growth

22 Feb '12

5 min read

Excluding this net after-tax gain, the Company would have recorded net income of $30.6 million, or $.19 per share, for the fiscal year ended January 29, 2011.

Comments on the Fourth Quarter and Fiscal Year Ended January 28, 2012

Stephen I. Sadove, Chairman and Chief Executive Officer of the Company, noted, “I am extremely pleased with our improved operating performance for both the fourth quarter and the fiscal year.

“Our comparable store sales rose 7.7% in the fourth quarter, in line with our expectations and on top of an 8.4% comparable store sales increase in last year's fourth quarter. For the full fiscal year, our comparable store sales rose 9.5%, among the best in retail.”

In the Saks Fifth Avenue stores, several merchandise categories showed strength during the fourth quarter, including women's and men's contemporary apparel, handbags, fine jewelry, fragrances, and men's 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 21% and 28% comparable store sales increases for the fourth quarter and fiscal year, respectively. OFF 5TH's comparable store sales, while positive, were below the Company's aggregate comparable store sales performance for both the fourth quarter and the year, although sales trends improved in the second half of the year.

For the fourth quarter, the gross margin rate was 37.6%, a 20 basis point decline from last year's fourth quarter rate of 37.8%. For the full year, the gross margin rate increased to 40.8% from 40.1% in the prior year. Sadove noted, “As expected, our gross margin rate declined modestly in the fourth quarter, but we are pleased with our full year gross margin expansion of 70 basis points which reflected a healthier luxury environment, more full-priced selling, and reduced promotional activity.”

During the fourth quarter and fiscal year, the Company incurred incremental SG&A expenses to support its growth in Saks Direct and its omni-channel initiatives as well as targeted incremental media spending and an increase in employee benefit expense. Consequently, the Company experienced modest deleverage during the fourth quarter; however, the Company achieved SG&A leverage for the full year.

Excluding the aforementioned certain items, SG&A expenses were 23.7% of sales in the fourth quarter this year compared to 23.4% of sales in the prior year fourth quarter, a 30 basis point increase. For the full fiscal year, excluding the previously mentioned certain items, SG&A expenses were 25.3% of sales for the current year compared to 25.6% of sales last year, or 30 basis points of leverage.

The Company generated operating income (excluding the aforementioned certain items) of 6.0% of sales in the current year fourth quarter compared to 5.9% in the prior year fourth quarter. For the fiscal year ended January 28, 2012, the Company's operating margin (excluding the aforementioned certain items) was 5.4% of sales, compared to 3.9% in the prior year. Sadove commented, “Our 2011 5.4% operating margin exceeded our 2007 pre-recession margin of approximately 4.4%, in spite of revenues that remain well below the 2007 level.”

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