BELK’S EARNINGS INCREASE 24.9% IN 1999
Byline: Thomas J. Ryan
NEW YORK — Powered by particularly robust sales of women’s apparel, Belk Inc.’s earnings climbed 24.9 percent last year, to $71.2 million from $57 million.
The gain came despite $6.1 million in special charges primarily tied to the consolidation of its 13 operating units into four regional divisions, in Charlotte and Raleigh, N.C.; Greenville, S.C.,; and Jacksonville, Fla. Excluding special charges, net earnings gained $23.5 million last year, Belk said in a 10-K filing with the Securities & Exchange Commission.
The Charlotte-based operator of 206 department stores in the Southeast began making its numbers public in 1998, when it reorganized into one operating company from 112 separate companies to compete better.
Sales last year gained 4.3 percent to $2.14 billion from $2.06 billion, reflecting a 2.4 percent comparable-store increase and $25.9 million from new, expanded and remodeled stores.
Belk said this year it intends to introduce e-commerce to its Web site, belk.com, and has established a separate division to develop and manage its e-commerce initiatives.
Its plans for the Web “will focus on specific Internet, Extranet and Intranet strategies that will streamline business processes, improve communications and enable the company to expand its merchandise offerings and service to customers, both within and outside of its current market areas,” Belk said in the 10-K. E-commerce strategies will focus on integrating the Internet into existing bricks-and-mortar business and establishing it as another electronic channel to serve customers.
In 1999 Belk tallied double-digit sales increases in women’s apparel, including better career and casualwear, petite and large-size sportswear, as a result of efforts to position itself as the leader in updated career and casual fashion in its markets, the firm said in the filing.
Belk said it serves medium and smaller markets, and typically is the leading seller in those market of megabrands such as Liz Claiborne, Lauren by Ralph Lauren, Tommy Hilfiger, Estee Lauder, Clinique, Lancome, Nine West, Fossil, Polo Ralph Lauren, Calvin Klein, Bali and Vanity Fair.
Revenues per square foot last year improved to $131 from $127. Gross margins increased slightly, to 32.4 percent from 32 percent, as a result of decreases in buying costs due to a more efficient purchasing structure. Selling, general and administrative expenses shrank to 25.5 percent of sales from 25.8 percent as a result of reduced personnel costs that were achieved through improved operating efficiencies, as well as higher finance charges and reduced bad debt losses on its proprietary credit card.
The move to consolidate to four regional divisions resulted in a $3.9 million charge to eliminate 340 positions, a $3.7 million charge to dispose of excess assets, and $6.4 million in one-time expenses for hiring and relocating employees and for systems conversions.
The latest year also included a $1.5 million charge tied to the disposal of TAGS Stores, its discount outlet subsidiary.
Belk said its ongoing consolidation efforts have already led to a more streamlined legal and operational structure, and the company expects “significant” expense savings through more efficient operation and management as well as through reduced taxes, improved cash management and more cost-effective financing.
Last year, Belk opened five stores and expanded five, adding 440,000 square feet for a total of 6.4 million. For 2000, plans call for eight openings and five expansions for total additions of 668,000 square feet.
The company said it will focus on fill-ins in medium-sized markets with store units in the 50,000- to 80,000-square-foot size range, and may pursue acquisitions. Belk said it has invested approximately $416 million over the past five years in building new stores and expanding and renovating existing stores.