NEW YORK — Despite an upbeat outlook for the holiday shopping season from Wal-Mart Stores Inc., Wall Street took a mixed bag of third-quarter retail sales and earnings results Tuesday as a bad omen by pulling back on the sector.
The S&P Retail Index finished the day down 1.65 percent at 456.75 after Wal-Mart, J.C. Penney Co. Inc., Nordstrom Inc. and TJX Cos. delivered stronger profits, Ross Stores sputtered and Saks Inc. posted a loss. The wider S&P 500 closed the day with a decline of 0.71 percent.
For the second consecutive quarter, Saks Inc. brought in a deeper-than-expected loss, as charges from the planned closings of 12 locations in its Saks Fifth Avenue Enterprises division, as well as hurricane-related costs, dragged down results.
For the quarter ended Oct. 30, the company posted a net loss of $24.8 million, or 18 cents a share, versus earnings of $12.4 million, or 9 cents, in the same period last year. Analysts were expecting a profit of 4 cents. Charges in the most recent quarter totaled $17.5 million, or 13 cents, net of taxes due to store closings. The company said quarterly results were negatively affected by an additional 3 cents because of the hurricanes that hit the South and East Coast this summer. Results in the year-ago quarter included net gains of $5.5 million.
Carving out the charges, Saks Department Store Group reported operating income of $1.1 million in the third quarter, down 94.6 percent from operating income of $20.9 million last year. On that same basis, operating income in the Saks Fifth Avenue Enterprises unit dropped 5.2 percent to $25.9 million from $27.3 million a year ago.
Total revenues in the quarter rose 1 percent to $1.5 billion, while consolidated comps rose 0.3 percent. By segment, sales in the department store group decreased 2.3 percent to $846.5 million, while sales at Saks Fifth Avenue Enterprises rose 5.7 percent to $635.1 million.
Consistent with its strategy of late, as well as with recent speculation among analysts, the company said it plans to close seven underperforming stores in its Saks Department Store Group.
Saks executives said on a subsequent conference call with Wall Street that they are “disappointed in the core margins of the department store business, and there’s a lot of work yet to be done on strategy and execution in this segment…we’re very intent and focused on that.”
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