Saks Q1 revenue up; increasingly optimistic about future
Retailer Saks Incorporated announced results for the first quarter ended April 30, 2011.
Overview of Results for the First Quarter Ended April 30, 2011
For the first quarter ended April 30, 2011, the Company posted net income of $28.4 million, or $.16 per diluted share. The results included the following after-tax items totaling $2.1 million, or $.01 per share, comprised of:
• $1.8 million of store closing expenses and
• a $0.3 million loss on debt extinguishment (related to the early retirement of approximately $1.9 million of senior notes).
Excluding these items, the Company would have recorded net income of $30.5 million, or $.17 per share, for the first quarter ended April 30, 2011.
For the prior year first quarter ended May 1, 2010, the Company recorded net income of $18.8 million, or $.11 per diluted share. Those results included after-tax charges totaling $1.1 million, or $.01 per share, primarily related to store closing costs. Excluding these items, the Company would have recorded net income of $19.9 million, or $.12 per share, for the prior year first quarter ended May 1, 2010.
For the current and prior year first quarters ended April 30, 2011 and May 1, 2010, respectively, the Company's two convertible debt instruments were dilutive; therefore, the applicable shares (approximately 40.9 million) were added to the weighted average shares outstanding and the applicable after-tax interest expense (approximately $4.0 million) was added to net income for the fully diluted earnings per share calculation.
Comments on the First Quarter Ended April 30, 2011
Stephen I. Sadove, Chairman and Chief Executive Officer of the Company, noted, "I am very pleased with our first quarter results. Our improved year-over-year performance was driven by a 10.2% comparable store sales increase and continued gross margin rate improvement."
In the Saks Fifth Avenue stores, several merchandise categories showed strength during the first quarter, including women's and men's apparel, handbags, and shoes. For the quarter, the sales increase in the New York City flagship store was in line with the Company's aggregate comparable store sales performance.
Saks Direct posted an approximate 25% comparable store sales increase in the first quarter. OFF 5TH's comparable store sales performance was below the Company's aggregate comparable store sales performance for the quarter.
The Company generated 100 basis points of year-over-year gross margin rate improvement in the first quarter, to 44.1% this year from 43.1% in last year's first quarter. The improvement primarily resulted from increased full-price selling.
As a percent of sales, SG&A expenses were 24.6% this year compared to 24.5% in the prior year. As expected, the Company incurred incremental expenses to support the growth in Saks Direct as well as targeted incremental media spending and an increase in employee benefit expense.