Under pressure from slower sales and its investments in strategic initiatives, Belk Inc. moved to a loss in the third quarter from a year-ago profit.
In the three months ended Nov. 1, the Charlotte, N.C.-based regional department store chain registered a net loss of $8.2 million versus net income of $3.6 million in the year-ago quarter. Eliminating gains on property and equipment sales and asset impairment and exit costs, the adjusted loss was $8.5 million and the profit in the 2013 quarter $4.6 million.
Sales declined 0.1 percent, to $859.5 million from $860.7 million, and were down 0.8 percent on a same-store basis. E-commerce sales expanded 46 percent in the quarter. Gross margin was down 120 basis points to 30.3 percent of sales versus 31.5 percent in the 2013 quarter.
Tim Belk, chairman and chief executive officer, said that Belk’s relatively flat sales performance was “in line with most of the department sector. The slowdown in sales, coupled with the increase in expense associated with our ongoing strategic investments, resulted in a year-over-year decline in profits.”
But the ceo said the firm was “well positioned for the holiday season and…encouraged by the prospects for an improved trend.”
Activewear “across all categories,” women’s contemporary and modern sportswear and men’s and children’s apparel were singled out for strong sales performances during a challenging quarter.
Belk this year embarked on a three-year, $700 million investment program that seeks to enhance its performance in areas including e-commerce, supply chain efficiency and store productivity.
For the nine months, Belk’s profits declined 33 percent, to $41.7 million, while sales grew 0.2 percent to $2.72 billion. Comp sales were down 0.1 percent and e-commerce revenues up 44 percent.
Belk, which operates 300 stores in 16 Southern states, is the largest privately held department store company in the U.S.