SAKS INC. NET DIVES 54.1%
Byline: Vicki M. Young
NEW YORK — The news from Saks Inc. on fourth-quarter profits was dismal.
The Birmingham, Ala.-based department-store company, which also operates upscale Saks Fifth Avenue, reported late Tuesday that income for the quarter ended Feb. 3 plummeted 54.1 percent, to $55.3 million, or 39 cents a diluted share, from $120.5 million, or 84 cents, in the year-ago period.
Results include asset write-offs connected to the sale of nine locations to The May Department Stores Co. and a loss for e-commerce operations. After the application of an intercompany royalty fee and corporate allocations, e-commerce pretax losses were $2.4 million in the quarter and $4.2 million in the year. Sales inched up 4 percent, to $2.1 billion from $2 billion in the year-ago quarter. Operating income was 6 percent of sales, or $127.2 million, compared with 11.1 percent, or $226.7 million.
A conference call with Wall Street analysts previously scheduled for this morning was canceled. The company said in a statement that final results were “consistent with preliminary results reported by the company on Feb. 8, 2001.”
The Feb. 8 announcement of preliminary results and guidance was made on the same day that Saks said it had ended plans to spin off Saks Fifth Avenue Enterprises and its related businesses which, the scuttled plans notwithstanding, remain the most viable and prestigious element of the company.
Shares of the stock closed Tuesday at $12.75, down 20 cents, or 1.54 percent, in trading on the New York Stock Exchange. The 52-week high was $15.06, and the low, $7.62. The company’s earnings announcement came after the market closed.
For the year, income fell 60 percent, to $75.2 million, or 53 cents a diluted share, from $189.6 million, or $1.30. Results also include the asset write-offs and e-commerce losses. Sales were up 2.3 percent, to $6.6 billion from $6.4 billion. Operating income was 4 percent of sales, or $261.9 million, compared with 7.1 percent, or $456.2 million, in the year-ago period.
Saks, on Feb. 8, said that comparable-store sales in the department-store group rose just 1.3 percent, but declined 1.9 percent for the year. The department-store group includes 252 traditional stores operating under the nameplates Proffitt’s, McRae’s, Younkers, Parisian, Herberger’s, Carson Pirie Scott, Bergner’s and Boston Store.
Comps for Saks Fifth Avenue Enterprises — 62 Saks Fifth Avenue stores, 49 Off 5th and Saks Direct businesses — declined 3.4 percent for the fourth quarter, but rose 3.4 percent for the full year.
The company said Tuesday that yearend inventories totaled $1.5 billion, a 2.3 percent increase over the prior year. The increase was primarily attributable to inventory investment in new stores and in saks. com.
Yearend gross receivables totaled $1.4 billion, up 0.9 percent over last year, with about 88 percent of receivables sold under the firm’s securitization programs.
In addition, the company’s debt-to-capitalization ratio was 44.1 percent, down from 47.2 percent at the end of last year.