New York–Saks Inc (SKS.N) reported a better-than-expected quarterly profits Tuesday as luxury spending rebounded strongly and the upscale retailer benefited from less discounting.
Saks reported net income of $18.8 million, or 11 cents per share, during that quarter that ended May 1, compared to a loss of $5.1 million, or 4 cents a share, a year earlier. Excluding severance and store closing costs, Saks reported a profit of 12 cents per share. On average, analysts were expecting first-quarter profit of 5 cents per share on sales of $662.9 million, Thomson Reuters stated.
Stephen I Sadove, chairman and ceo of the company, said: “I am very pleased with our first quarter operating performance. These results exceeded our expectations and were driven by comparable store sales growth, gross margin expansion, and expense leverage. The Saks team has carefully navigated through the challenging environment, and we are now moving cautiously from defense to offense.”
Adding to the more optimistic pictures, Saks said sales at stores open at least a year rose 6.1% during the first quarter. The retail company forecasts same store sales could rise in the “low-to-mid single digit” range for the second quarter, and in the “mid-single digit range” for its full fiscal year.
Overall sales were up 6.9% to $667.4 million. Gross margins rose 4.4 percentage points to 43.1% from a year earlier, as the company reported more regular price sales.
New Off 5th Stores to be Added
The company also recently reported that it would be opening four new Saks Fifth Avenue Off 5th outlet stores and the complete renovation of an existing Off 5th store.
New Off 5th stores will open in metropolitan Pittsburgh; Portland, OR; Houston; and Raleigh/Greensboro, and the Off 5th store in Riverhead, NY is undergoing renovation. The new Off 5th stores will range between approximately 23,500 and 29,000 square feet.
The new and renovated stores will mirror the company’s prototype store which opened in 2008 in Orlando, Florida. Since then, the company has opened 10 new-formatted Off 5th stores across the country. These new stores also feature enhanced merchandise offerings in several categories including jewelry, shoes, sunglasses and skincare.