(c) 2009 Dow Jones & Company, Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission.NEW YORK -- Saks Inc.'s fiscal second-quarter loss widened on lower margins as markdowns continued to take a toll, but the luxury retailer's loss was much better than expected, aided by strong expense management, while sales slid.
Chairman and Chief Executive Stephen Sadove said although the economy remains difficult, the company's gross margin exceeded expectations and inventories were down 18% per store on ayear-over-year basis.
Comparable-store sales declined 15.5% in the second quarter, which the company said was in line with its expectations. Comparable-store sales benefited from the shift of a spring clearance event into the second quarter this year.
Saks has been cutting the prices on its goods in efforts to improve sales, walking a fine line between retaining its cachet as a luxury retailer and appearing to go too far downmarket.
Mr. Sadove also said the economy continues to make predicting future sales and margins difficult.
For the period ended Aug. 1, Saks posted a loss of $54.5 million, or 39 cents a share, compared with a year-earlier loss of $32.7 million, or 24 cents a share. The second-quarter showing was much better than the 52-cent-a-share loss analysts were expecting.
Net sales fell 15% to $561.7 million, when Wall Street was expecting $563 million. Two weeks ago, the company reported same-store sales fell 16%, helped by the shift of a one-time designer sale that the company moved into June after hosting it in May last year. Excluding that shift, same-store sales would likely have fallen about 19%.
Gross margin fell to 29.9% from 34.6% on the clearance event shift and increased markdowns.
The company said it continued to see weakness across all categories and locations, and the sales decline at its New York City flagship store continued to be higher than the overall drop.
Saks affirmed its outlook for a fiscal-year same-store sales decline in the low double digits.
---
Kerry Grace Benn contributed to this article.
Credit: By Karen Talley
My Research
