Improvement in operating performance, Saks

18 Aug '10

5 min read

Retailer Saks Incorporated announced results for the second quarter and six months ended July 31, 2010.

Overview of Results for the Second Quarter and Six Months Ended July 31, 2010

For the second quarter ended July 31, 2010, the Company recorded a net loss of $32.2 million, or $.21 per diluted share. Those results included after-tax charges totaling $11.7 million, or $.08 per share, comprised of:

• net lease termination costs of $10.6 million, primarily related to the planned closings of the Saks Fifth Avenue stores in Plano, Texas and Mission Viejo, California and
• $1.1 million of severance and other store closing costs primarily related to the Plano and Mission Viejo store closings as well as the Portland, Oregon; San Diego, California; and Charleston, South Carolina store closures in July 2010.

Excluding these after-tax charges, the Company would have recorded a net loss of $20.5 million, or $.13 per share, for the second quarter ended July 31, 2010.

For last year's second quarter ended August 1, 2009, the Company posted a net loss of $54.5 million, or $.39 per share.

For the six months ended July 31, 2010, the Company recorded a net loss of $13.4 million, or $.09 per diluted share. Those results included after-tax charges totaling $12.8 million, or $.09 per share, comprised of:

• the aforementioned net lease termination costs of $10.6 million and
• $2.2 million of severance and other store closing costs related to the planned Plano and Mission Viejo closings as well as the Portland, San Diego, and Charleston store closures.

Excluding these after-tax charges, the Company would have recorded a net loss of $0.6 million, or $.00 per share, for the six months ended July 31, 2010.

For the prior year six months ended August 1, 2009, the Company posted a net loss of $59.6 million, or $.43 per share. Excluding the after-tax loss from discontinued operations of $0.2 million, the Company recorded a loss from continuing operations of $59.4 million, or $.43 per share.

Comments on the Second Quarter and Six Months
Stephen I. Sadove, Chairman and Chief Executive Officer of the Company, noted, "I am pleased with the meaningful improvement in our operating performance for the second quarter and six months ended July 31, 2010 (excluding the previously mentioned store closing costs). These results exceeded our expectations and primarily were driven by comparable store sales growth and significant gross margin expansion.

"Our 4.6% second quarter comparable store sales increase was consistent with our expectations, even as we strategically reduced our promotional activity. Comparable store sales grew 5.4% for the six months."

Sadove noted, "During the first half of this year we began to experience a more stable operating environment due in part to the improved financial markets; however, the macroeconomic outlook remains uncertain, and accordingly, we will continue to approach the future cautiously. We have taken a number of actions over the past two years to navigate the challenging business climate, and while we will continue to maintain a conservative bias, we have made and will continue to make some targeted investments to support continued sales growth."

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