Charlotte, NC—Citing increased costs especially for its online strategy, Belk Inc. said Wednesday that its 2013 profit was down 15.9% even though sales were up.
For the 12 months ending Feb. 1, the privately-owned department store company posted net income of $158.5 million compared with $188.4 million a year ago.
Net revenue rose 2.1% to $4.04 billion, up from $3.96 billion the previous year. Comparable store sales rose 2.9%. Online sales grew 42.5%, accounting for about 1.5% of its comp sales.
Top-performing categories included activewear, women’s contemporary, resort and bridge fashions, women’s suits, men’s better sportswear and clothing, kid’s apparel and shoes.
“Compared to recent years, fiscal 2014 was a challenging year with a shorter holiday selling season, and our earnings were impacted by additional expense associated with key strategic initiatives, such as expanded omnichannel and e-commerce capabilities,” CEO Tim Belk said.
Those initiatives, including a new merchandising system and replacing its IT infrastructure, resulted in lower margins and higher expenses.
Belk planned to invest more than $700 million over a three-year period beginning last year in its omnichannel initiatives as well as expanding stores in current and future markets. It also will expand and remodel existing stores and merchandise departments.
Another $32 million is being spent on expanding its e-commerce fulfillment cents in Union County, SC.
Belk’s board of directors approved the repurchase of nearly 2.1 million shares of the company’s common stock at $48.10 a share. Belk expects to begin repurchasing shares on April 24.
In addition, Belk announced a regular dividend of 80 cents a share.