Belk Inc. got a good sales gain during the first quarter but the bottom line fell 30 percent due to increased promotions and investments in new strategies.
Net income for the quarter ended May 4 reached $28.2 million, compared to $40.3 million in the year-ago period, while net sales increased 5.1 percent to $956 million and comparable-store sales gained 5.2 percent. E-commerce sales grew 67 percent over the same prior-year period. Online sales positively affected comparable-store sales by 1.6 percent in the quarter.
“Our sales growth for the quarter remained strong as we continue to benefit from the investments we are making in the business,” Tim Belk, chairman and chief executive officer, said Monday. “The bottom line was impacted by lower margins resulting from increased promotions as well as the expense associated with the investments. While those investments will increase our expense in the short term, we expect them to generate strong future returns.”
Charlotte, N.C.-based Belk attributed the sales gain to increased promotions and investments in ongoing strategic merchandising, marketing, branding, e-commerce and service initiatives. Accessories, cosmetics, fine jewelry, men’s and kids were the best performing categories.
In outlining its strategic initiatives, Belk, which is celebrating its 125th anniversary this year, said it completed shoe and jewelry expansions and remodels in 24 stores last quarter, and launched two private brands this spring — Made Cam Newton men’s wear, and Cynthia Cynthia Rowley for women’s apparel and accessories. RELATED CONTENT: WWD Earnings Tracker >>
This year, the $3.8 billion, 301-unit Belk is planning to open a store in New Braunfels, Tex., and two replacement stores in Morganton and Salisbury, N.C. The retailer also has on tap for this year eight store expansions, nine remodels and expansions and remodels of watches and sunglasses departments in 25 stores. Belk previously revealed plans to open flagships in 2014 at the Galleria in Dallas and Bridge Street Town Centre in Huntsville, Ala. It also plans to expand and convert the Flowood, Miss., Greensboro, N.C., and Mt. Pleasant, S.C., stores to flagships over the next two years.