Q4 Reports: Saks, Dillard’s Profit on Sales Increases

More Full Priced Sales Push Saks Inc. into Q4 Profit

Saks Fifth Avenue flagship

New York—Saks Inc. reported today that sales of full-price merchandise pushed it into its first fourth-quarter profit in three years as luxury consumers returned to pay discretionary items, including accessories.

For the three months ending Jan. 29, net income was $25 million, or 14 cents a share, compared with a net loss of $4.61 million, or 3 cents, a year earlier, the retailer said. Adjusted earnings were 13 cents per share, which removes a penny per share for a gain tied to some Saks Fifth Avenue store closings. Analysts’ average estimate was for 8 cents per share.

Sales revenue rose 7% to $866.3 million from $811.3 million, also beating analysts’ average estimate of $854.4 million. Revenue at stores open at least a year climbed 8.4% spurred by top sellers including men’s and women’s apparel, handbags and footwear at Saks Fifth Avenue. Sales at Saks’ flagship Fifth Avenue store had a same-store increase albeit lower than the total 8.4% increase.

High Potential: Handbags, Footwear

In its statement, the company said it remains committed to the “9-box grid and our ‘good, better, best’ model, we appropriately balanced our inventory to customer trends by store. We made inventory commitments in high-potential growth areas such as shoes and handbags.”

While same store sales at its Off 5th division were less than the company total, Saks Direct, which includes online sales, had nearly a 36% increase in comparable sales for the quarter and about a 28% increase for the full year. Gross margin improved to 37.8% from 36.5% due to more full-price sales and fewer promotions, the company said.

“The meaningful year-over-year improvement resulted from comparable store sales increases and gross margin rate expansion,” Stephen Sadove, chairman/ceo, said.  “Our team executed very well during the year as we strategically moved from defense to offense.”

 Fiscal 2010 Same Store Sales Rise 6.4%

For the fiscal year, Saks Inc. posted net income of $47.8 million, or $.30 per share including an after-tax gain of $17.2 million, or $.11 per share. Excluding this net gain, the company would have recorded net income of $30.6 million, or $.19 per share. Net loss was $57.9 million, or $.40 per share including after-tax items totaling $10.4 million, or $.07 per share. Excluding those items, net loss would have been $47.5 million, or $.33 per share.

Full-year revenue rose 6% to $2.79 billion from $2.63 billion. Same store sales for the year climbed 6.4%. The company also forecast that for its fiscal 2011 it predicts same-store sales will rise in the mid-single digits.

Dillard’s Q4 Income Rises 38% On Increased Sales, Lower Costs

Little Rock, AR–Dillard’s bolstered its fourth quarter profits, citing disciplined inventory management and expenses control. Net income rose 38% to $109.6 million, or $1.75 per share, in the three months ended Jan. 29, compared with a net income of $79.5 million, or $1.08 per share, in the same quarter 2009, the department store chain reported Tuesday afternoon.

Excluding one-time gains and a tax benefit, the company would have earned $1.55 per share in the latest period, up from $1.04 per share a year ago on the same basis, and ahead of analysts’ average estimates for $1.38 per share.

The company said its sales rose 5% to $1.934 billion from $1.834 billion, with merchandise sales up 6% to $1.934 billion. (Additional revenue comes from the company’s CDI Contractors construction business). Comparable store sales increased 7%, a big jump from a 5% decline for the same period 2009.

“Our fourth quarter results underscore a year of progress at Dillard’s,” William T. Dillard, ceo, said. “We began 2010 well positioned to achieve notable results, and we remained focused on our core initiatives throughout the year. We executed disciplined inventory management and controlled our expenses while seeking clear distinction in the mind of the fashion consumer.”

Full Year Profit More Than Doubles

Indeed, the company is well positioned going into 2011, too. Dillard’s said its annual profit more than doubled to $179.6 million, or $2.67 per share, from $68.5 million, or 93 cents per share, in 2009. Net sales edged up to $6.12 billion from $6.1 billion. Gross margin improved as inventory in established stores declined 2%.

Due to its strong cash flow, Dillard’s board of directors approved the repurchase of up to $250 million in Class A stock, Dillard said. The board approved a buyback of $250 million in stock in August, and at the end of the fourth quarter, had spent all but $18.7 million under that authorization. The company also declared a cash dividend of 4 cents on Class A and Class B stock.

“We are energized by these results, and we are excited about the future of Dillard’s,” Dillard added. Dillard’s operated 294 stores and 14 clearance centers. During the quarter, Dillard’s closed two stores, and plans to close its Decatur, Alabama, store later this year.

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