Belk Inc. took heavy fourth-quarter losses after writing down the value of previous acquisitions, but the nation’s largest privately owned department store said it is poised to emerge from the downturn in better shape.
This story first appeared in the April 3, 2009 issue of WWD. Subscribe Today.
Losses for the quarter ended Jan. 31 tallied $202.8 million after a $326.6 million pretax charge for goodwill impairment, which accountants use to register the intangible assets of acquisitions. In recent years, Belk bought a string of chains, including Proffitts, McRae’s and Parisian from Saks Inc. The quarterly losses compared with year-ago earnings of $85.6 million.
Sales for the three months fell 9.8 percent to $1.11 billion from $1.23 billion.
Steve Pernotto, executive vice president of human resources, said the company has cut costs and expenses and is positioned to benefit when spending picks up. Just when that will be remains to be seen, but Pernotto said consumer attitudes have stabilized recently.
“In the fourth quarter we continued to see uncertainty in terms of the consumer’s reaction to the economic news,” he said. “We’re beginning now to see some settling in that sentiment.”
Tim Belk, chairman and chief executive officer and a member of the third generation of Belks to run the firm, said, “We responded to declining sales with an aggressive focus on managing inventories, expenses and capital expenditures.”
He also expressed confidence “Belk will emerge from this period as a stronger, more competitive company that can deliver profitable growth for the long term.”
For 2008, losses totaled $213 million and compared with year-ago earnings of $95.7 million. Revenues fell 8.5 percent to $3.5 billion from $3.82 billion and were down 8.7 percent on a same-store basis.
Belk, which operates 307 stores in 16 Southern states, reported full-year results Thursday and WWD calculated fourth-quarter performance by subtracting results for the first nine months of the year from those for the 12 months. The Charlotte, N.C.-based firm has public debt and is obliged to give regular updates on its finances.