NEW YORK — Amid one of the biggest strategic transitions in its history, Saks Inc. delivered strong operating results for the third quarter, reversing a year-ago operating loss, on sales that declined 11.2 percent.
The retailer, which recently sold its Proffitt's/McRae's business for $623 million to Belk and announced the sale of its northern department store group to Bon-Ton for $1.2 billion, also said Tuesday that it had changed its mind about selling Club Libby Lu and will keep it.
R. Brad Martin, chairman and chief executive officer of Saks, said during a conference call with investors that the retailer would continue operating the store-in-store locations of Club Libby Lu, "but going forward, we'll focus on growth via the stand-alone business model."
"We believe there are new unit growth opportunities for this exciting, unique and productive specialty store concept," Martin said.
Commenting on the sale of Saks' department store businesses, Martin offered music to shareholders' ears: "With our strong balance sheet and our expectations for the future improved performance of the [Saks Fifth Avenue Enterprises] and Parisian businesses, we currently believe that it will be appropriate to distribute a substantial portion of the proceeds from the [northern department store group] transaction to our shareholders," Martin said in a statement.
For the quarter ended Oct. 29, operating income was $15.6 million, which compares with an operating loss of $15.9 million in the same period last year. Sales during the quarter fell to $1.32 billion from $1.48 billion. Net income was $225,000, or zero cents per share, which compares with a loss of $30.4 million, or 22 cents, in the same period last year.
Bottom-line results include a variety of awards and charges, such as a $10.5 million gain earmarked for the insurance settlement of its storm-damaged SFA store in New Orleans. This was offset by a $4.5 million asset impairment charge and other costs relating to the sale of Proffitt's/McRae's. Other charges included a $4.6 million legal bill for the investigation into improperly collected markdowns at SFA as well as for the ongoing investigation by the Securities and Exchange Commission and the U.S. attorney into those practices.
Steve Sadove, vice chairman and chief operating officer, said during the conference call that Saks Department Store Group posted a total sales decline of 19.6 percent to $680.6 million as comparable-store sales rose 0.1 percent. SDSG's operating income rose $9.5 million in the quarter, to $13.3 million."Parisian generated improved operating performance for the period resulting from a low, single-digit comp-store sales increase, gross profit margin improvement and careful expense management," Sadove said. "There's more work to be done to create long-term value, but we believe this business has an exciting future and that we can continue to improve those operating margins."
At SFAE, total sales were flat at $634.5 million, but comps showed a 5.4 percent gain. Carving out the expenses related to the markdown investigations and other charges, SFAE's operating income "would have totalled approximately $31.8 million, or a $10.4 million improvement over the prior year," said Fred Wilson, chairman and chief executive officer of SFAE. Wilson said SFAE's "target growth areas" during the quarter included contemporary and designer apparel, shoes and handbags.
@tradesy is turning the concept of a showroom upside down with its new space in Santa Monica. Here, the company plans to hold events, art exhibits and a showcase rare fashion pieces like this Louis Vuitton boxing set. Get all the details on Tradesy’s first showroom on WWD.com. #wwdnews
Spotted last night at the @erdem x @hm launch event: Kate Bosworth, Rashida Jones, Kirsten Dunst and Selma Blair. The party, which took place in LA, also marked the opening of their pop-up shop. “I was interested in creating a collection that wasn’t in any way disposable. It was about pieces you’d create and keep forever, things that have a permanence to it,” designer Erdem Moralioglu said. #wwdeye (📷: Katie Jones)
Renee Zellweger in yellow in 2001 and again in 2017. Chosen as one of the 12 @pantone Leading Spring Colors (and dubbed “Meadowlark”), it only makes sense that the bright hue stands the test of time and is making a resurgence this season, seen already on stars like @blakelively and @gigihadid. (📷: Donato Sardello & @rexfeatures) #wwdfashion #tbt
Dior’s 70th anniversary celebration continues with a new exhibition at the Royal Ontario Museum in Toronto. “Christian Dior,” which is scheduled to run through March 18, takes a look at the founders tenure from 1947 to 1057 and feature 40 designs. Pictured here is an evening gown from the Ailée, fall 1948-49 haute couture collection. #wwdfashion (📷: Brian Boyle)
As one of the most recognizable models in the world, Christy Turlington Burns has an insider’s view of the fashion industry and the allegations of sexual harassment swirling around it. “I can say that harassment and mistreatment have always been widely known and tolerated in the industry. The industry is surrounded by predators who thrive on the constant rejection and loneliness so many of us have experiences at some point in our careers,” Turlington told WWD, along with her suggestions for how the modeling world should protect younger women and men. Read more on WWD.com. Link in bio. (📷: Tony Palmieri) #wwdnews
@asics America has tapped a new brand ambassador: famed DJ/record producer @steveaoki. This initiative is intended to set the tone for the new brand identity and philosophy and will include partnerships with influencers and in-store and off-line activations that will continue into next year. This is Asics’ most significant marketing effort in two decades, and is expected to attract younger consumers to the brand. #wwdfashion
24-year-old Jean Prounis is redefining the rules of jewelry. Formerly a studio assistant to Jemima Kirke and a design apprentice at Ghuran, she focuses on handcrafted subtleties and ancient goldsmithing techniques. “There was a really sterile feel in the environment and I wanted to have jewelry with character that shapes how you wear it everyday,” Prounis said. Each piece is hand made in New York, either by Prounis or three other jewelers in the district. #wwdfashion
“These collections continue to build on that vision, empowering differently abled adults to express themselves through fashion,” said @tommyhilfiger of his line of adaptive apparel, which launches today. The line consists of 37 men’s and 34 women’s styles based upon the pieces from the spring Tommy Hilfiger sportswear collection. #wwdnews