NEW YORK — Belk Inc. parlayed better sales, lower costs and a gain on the sale of investment property into a sevenfold increase in third-quarter profits.
Net income for the three months ended Nov. 1 hit $17.6 million, more than seven times the year-ago figure of $2.5 million. Stripping away an $8.1 million aftertax gain on the sale of property as well as year-ago charges of about $500,000, profits still more than tripled, to $9.5 million from $3 million.
Top-line trends were positive as well. Sales in the quarter moved upward 2.3 percent to $508.5 million from $496.9 million in the prior-year period. Comparable-store sales rose 1.5 percent, reversing a decline of 5.1 percent during the first six months of the year and elevating year-to-date comps to a 3 percent decline.
John Belk, chairman and chief executive officer of the firm, said in a statement, “We’re encouraged by the improvement in comparable-store sales and optimistic about the fourth quarter. We’ll continue to emphasize inventory control and expense management as key drivers of our profitability.”
The bottom-line pickup at Belk came about as a result of its ability to hold the line on expenses as its revenues expanded. Cost of goods sold declined 1.2 percent to $345.7 million from $350 million in the 2002 quarter, but that reduction was more than offset by a 4 percent increase in selling, general and administrative costs, which crept up to $139.4 million from $134 million. Still, operating income nearly doubled to $23.4 million from $12.6 million.
For the nine months, net income ascended a robust 72 percent to $40.6 million from $23.6 million and was up 11.9 percent, to $31.9 million from $28.5 million, when special items were excluded. Sales fell 1.3 percent to $1.5 billion from $1.52 billion.
Belk is the largest privately held department store group in the U.S., with 221 stores in 13 Southeastern and Middle Atlantic states, but discloses its sales and earnings on a quarterly basis due to public debt. It opened four stores during the third quarter, all of them in new markets, and added three new stores, also in new markets, on Nov. 5, bringing its unit openings this year to eight. It’s planning 14 stores, 10 of them in new markets, in 2004.The firm has benefited financially from its 2002 consolidation of merchandising and marketing personnel but, as reported, has faced a number of lawsuits alleging age discrimination as a result.
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