Saks Inc. (SKS) reported total sales of $175.6 million for the month of January 2012, which was 7.2% higher than $163.8 million in January 2011. The company’s comparable store sales grew 10.5% for the five weeks ended Jan 29, 2012, as it benefited from a designer clearance event.
During the five-week period, the company saw growth in women’s contemporary and “gold range” designer apparel; handbags; and men’s accessories, clothing and contemporary apparel. However, the strong performance in these sectors was partially offset by the warm winters experienced this year.
For the fourth quarter 2012, which ended on January 28, 2012, sales totaled $905.1 million, up 6.4% from $850.8 million reported in the prior fourth quarter ended January 29, 2011. Comparable store sales increased 7.7% for the fourth quarter.
For the fiscal year 2012, owned sales totaled $2,955.7 million, which was 7.8% higher than $2,740.6 million reported in the previous year. Comparable store sales increased 9.5% for the fiscal year.
Due to the seasonal nature of the business, approximately 30% of Saks’ sales are generated during the fourth quarter, and normally a large portion of its operating income is generated only during the fall season. Nevertheless, the company generated strong third-quarter 2011 earnings of 11 cents per share, which surpassed both the Zacks Consensus Estimate by 2 cents and the prior-year earnings by 5 cents.
The economy is still weak and given the uncertainty in the economy, customers are staying away from discretionary items. It would take more than couple of quarters for Saks to see a substantial improvement in its sales.
Saks holds a Zacks #3 Rank, which translates into a short-term Hold rating. Currently, we maintain a long-term Neutral recommendation on the stock.
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