Strong e-commerce and same-store sales, helped by a good performance in women’s and men’s activewear, enabled Belk Inc. to stand out among department stores reporting first-quarter results.
In the three months ended May 2, net income rose 13 percent to $21.8 million from $19.3 million. Excluding special items, such as $2.9 million spent on its highly scrutinized long-term strategic review, profits were up 26.8 percent to $24.6 million.
Sales advanced 3.1 percent, to $985 million from $955.1 million a year ago, as comparable sales gained 3.3 percent, with a 36.7 percent increase in e-commerce sales accounting for 2.1 points of the comp gain.
“First-quarter sales remained strong, continuing the trend we saw in the fourth quarter of fiscal-year 2015,” said Tim Belk, chairman and chief executive officer of the Charlotte, N.C.-based company. “E-commerce continues to be our fastest-growing business. Although the expenses related to our investments continue to impact earnings, we are beginning to see the benefits in top-line growth and higher margins.”
Gross margin for the quarter was flat, at 32.4 percent of sales, while operating margin improved to 4.5 percent of sales from 4.3 percent in last year’s quarter.
Belk identified men’s and women’s apparel as its strongest performers during the quarter, noting a solid contribution from activewear in both categories.
Belk, the largest privately owned department store in the U.S., has gotten an uncharacteristic amount of attention since April, when it confirmed that it had hired Goldman, Sachs & Co. as part of a five-year strategic planning process. Reports have circulated that it is seeking a sale, or at least listening to ideas from prospective buyers.
Private-equity firms have reportedly expressed interest, as have a number of other regional department stores with limited or no geographic overlapping market representation. Some reports have even had Goldman actively shopping the retailer to would-be buyers, including a number of international interests.