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Belk Inc. achieved double-digit earnings growth in the second quarter as strength in e-commerce helped it overcome decelerating retail conditions.
This story first appeared in the September 5, 2013 issue of WWD. Subscribe Today.
In the three months ended Aug. 3, net income expanded 11.3 percent to $30.5 million from $27.4 million in the 2012 quarter. Excluding onetime gains and charges in both periods, profits rose 14 percent to $30.9 million.
Revenues increased 3.6 percent to $899.5 million from $867.9 million in the prior-year period, with comparable sales up 3.2 percent. E-commerce sales, not specified, were up 48.5 percent during the quarter, accounting for 1.3 points of the comp increase. Gross margin pulled back a fraction, landing at 33.1 percent of sales from 33.3 percent.
“Although we continue to see a softening retail environment, we are pleased to report another quarter of sales and earnings growth driven in part by the investments we are making in the business,” said Tim Belk, chairman and chief executive officer. “While those investments impact our short-term profitability, we are confident they will position us well for the future.”
The Charlotte, N.C.-based company, the largest privately held department store in the U.S., is in the midst of its 125th anniversary celebration and has spread its investments among merchandising, marketing, branding, e-commerce and service initiatives. The company currently has 301 stores in 16 Southern states and is looking to hit $6 billion in revenues in five years. It has continued to update its stores and, under the marketing theme “Modern. Southern. Style.,” has picked up its merchandising and marketing game with expanded exclusive offerings, such as Cynthia Cynthia Rowley for women and Made Cam Newton for men, and greater visibility, including its sponsorship of the 12th season of “Project Runway.”
The company identified men’s and children’s apparel, activewear and women’s contemporary sportswear and dresses as standout categories during the quarter.
For the first half of the year, net income fell 13.3 percent to $58.7 million as revenues grew 4.4 percent to $1.86 billion. Comps for the six months were up 4.2 percent, greater than the quarterly pace.