NEW YORK — Belk Inc.’s earnings rose in the second quarter and first half of the year, despite declines in net and same-store sales in both periods.
The Charlotte, N.C.-based department store operator registered net income of $8.9 million during the three months ended Aug. 2, more than twice the $3.8 million earned in the year-ago quarter. Excluding the effects of year-ago restructuring charges, which boosted earnings after a tax benefit, and gains on property, equipment and investments in both years, profits rose 5 percent to $8.4 million from $8 million.
Net sales declined 0.6 percent, to $492.1 million from $495.3 million, while same-store sales dropped 2.7 percent.
“Inventory management and expense control have enabled us to produce solid earnings during a challenging sales environment for our stores,” said John Belk, chairman and chief executive, in a statement.
Accordingly, while selling, general and administrative expenses were virtually unchanged — dropping to $135.1 million from $135.2 million — the cost of goods sold declined 1.7 percent to $333.8 million from $339.7 million a year ago. Cost of goods sold includes occupancy costs and buying expenses.
Separately, a Maryland court granted Belk’s request to have David Hines’ $4 million age discrimination suit transferred to a federal court in North Carolina. U.S. District Court Judge Peter Messitte ruled that the North Carolina court was the more appropriate venue, given that Hines’ claim related to action in that state and that most witnesses expected to be called live there. Since his termination as part of Belk’s 2002 reorganization, Hines has lived in Delaware, not Maryland.
As reported, Hines, president of Belk’s northern division from November 2000 until August 2002, filed his suit in April.
Belk, the largest privately held department store firm in the U.S., currently operates 214 stores in 13 states, primarily in the Southeastern quarter of the U.S. It is entering eight new markets this year and already has opened a store in Gulfport, Miss. This week, it will open stores in three Tennessee communities — Gallatin, Columbia and Springfield — as well as in Lufkin, Tex. Subsequent openings are planned for Destin, Fla., as well as Hot Springs and Conway, Ark., on Nov. 5.“With a total combined size of approximately 517,000 square feet of space, these stores will continue Belk’s long-standing tradition of providing customers with the top fashion brands in convenient locations and the best in value, quality and service,” Belk said.
For the six months, net income increased 9 percent to $23 million from $21.1 million. Excluding special restructuring charges and gains, earnings were down 11.8 percent to $22.5 million from $25.5 million. Sales declined 3.1 percent, to $994.8 million from $1.03 billion, while comparable-store sales dipped 5.1 percent.
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