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Saks swings to loss on weak gross margins
19
Nov '08
Retailer Saks Incorporated announced results for the third quarter and nine months ended November 1, 2008.

Overview of Results for the Third Quarter and Nine Months.
Saks recorded a net loss of $42.8 million, or $.31 per share, for the third quarter ended November 1, 2008. The third quarter included the following after-tax items totaling $24.5 million, or $0.18 per share:

-- expenses of $10.6 million related to asset impairments (primarily related to discontinuation of the Club Libby Lu operations),

-- a gain of $0.7 million related to the sale of a vacant real estate parcel, and

-- the write-off and adjustment of $14.6 million of certain deferred tax assets primarily associated with Federal Net Operating Loss tax credits that are subject to expiration at the end of fiscal 2008.

For the prior year third quarter ended November 3, 2007, the Company recorded net income of $21.6 million, or $.14 per share. The prior year third quarter included the following after-tax items totaling $4.3 million, or $.03 per share:

-- expenses of approximately $0.5 million for retention, severance, and transition costs related to the Company's downsizing and consolidation following the disposition of its Saks Department Store Group ("SDSG") businesses,

-- $0.3 million related to asset impairments and dispositions,

-- expenses of approximately $0.8 million due to an increase in income tax reserves related to certain tax examinations, and

-- expenses of approximately $2.7 million associated with the previously disclosed investigations and settlements.

For the nine months ended November 1, 2008, Saks recorded a net loss of $56.2 million, or $.41 per share. The nine months included the following after-tax items totaling $25.5 million, or $0.18 per share:

-- expenses of $11.4 million related to asset impairments (approximately $10.6 million of which were related to discontinuation of the Club Libby Lu operations with the majority of the balance related to the Saks Fifth Avenue Ft. Lauderdale store closing),

-- expenses of approximately $0.2 million for severance costs related to the Ft. Lauderdale store closing,

-- a gain of $0.7 million related to the sale of a vacant real estate parcel, and

-- the write-off and adjustment of $14.6 million of certain deferred tax assets previously mentioned.

For the prior year nine months ended November 3, 2007, the Company recorded net income of $8.0 million, or $.05 per share. The prior year nine months included the following after-tax items totaling $26.6 million, or $.17 per share:

-- expenses of approximately $16.2 million for retention, severance, and transition costs,

-- a loss on extinguishment of debt totaling $3.4 million related to the repurchase of $106.3 million of senior notes,

-- $2.5 million related to asset impairments and dispositions,

-- expenses of approximately $0.8 million due to an increase in income tax reserves related to certain tax examinations, and

-- expenses of approximately $3.7 million associated with the previously disclosed investigations and settlements.

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Saks Incorporated


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