Belk Inc.’s corporate rebranding and marketing program helped it realize a third-quarter sales increase, but associated expenses threw it to a loss versus a year-ago profit.
In the three months ended Oct. 30, the Charlotte, N.C.-based department store group registered a net loss of $4.2 million versus a year-ago net profit of $400,000. Eliminating asset impairments, stores closings and other nonrecurring items, the net loss was $6.1 million versus a profit of $1.3 million in the 2009 quarter.
Sales rose 2.6 percent, to $746.6 million from $728 million, and were up 2.5 percent on a same-store basis. Gross margin declined to 30.9 percent of sales from 31.8 percent in the comparable three months last year.
“This is our third consecutive quarter of comparable-store sales growth with solid margins,” said Tim Belk, chairman and chief executive officer of the 305-unit department store group. “We are investing in strategic areas, including branding, IT infrastructure and merchandising headcount, which has raised our costs for the quarter but which we believe will boost performance over the long term.”
The bottom-line decline, the firm said, could be traced to an $11 million increase in expenses, $10 million of which were linked to corporate rebranding and “other strategic initiatives.” During the quarter, Belk unveiled a new logo and company tag line — “Modern, Southern. Style.” — and promoted its new identity through advertising and social media efforts that continue in the fourth quarter.
For the nine months, net income more than doubled to $32.6 million from $10.4 million while sales advanced 4 percent to $2.34 billion. Gross margin was elevated to 32.2 percent of sales from 31 percent.
Belk is the largest privately held department store retailer in the U.S. It discloses its financial results because of public debt.