Saks Loss Shrinks in Q4

Luxury retailer Saks Inc. reported Wednesday that its loss narrowed in the fourth quarter compared with last year, as results were helped by reduced inventory and less deep discounting to clear out goods.

But it offered a cautious sales outlook amid continued economic uncertainty.

Saks says that it lost $4.61 million, or 3 cents per share, in the quarter that ended Jan. 30. That compares with a loss of $99.74 million, or 72 cents per share, in last year’s fourth quarter.

The 2009 fourth quarter included several one-time items that weighed down profit by $14.8 million, or 9 cents per share, related to asset impairments and a pension charged related to layoffs.

Revenue fell 3.4 percent to $811.3 million.

Sales at stores open at least a year fell 4.8 percent. The figure is considered a key measure of a retailer’s health because it excludes results at stores that have opened or closed during the year.

Analysts were expecting a loss of 2 cents per share on revenue of $799.1 million.

In a statement released Wednesday, Stephen Sadove, Saks chairman and chief executive, said that excluding one-time items, the company was able to post a modest fourth quarter profit due to substantial improvement in its gross margin and “diligent” expense controls.

Saks and many other luxury retailers were among the hardest hit when the economy went into freefall, as affluent shoppers who had been splurging on designer goods pulled back, resulting in piles of goods that had to be discounted heavily. But this past holiday season, upscale retailers were prepared for the new consumer mindset, slashing inventory and working with suppliers to lower prices on designer goods.

For the quarter, Saks’ inventories decreased 11 percent at stores open at least a year. By managing its inventory better, Saks was able to increase its gross profit margin by 4.4 percentage points.

However, while Sadove said that there is more “stability and predictability” in the business compared with a year ago, the overall environment remains “somewhat uncertain and challenging.” As a result, Saks said that it expects that sales at stores open a least a year will be in the low to mid-single digits for the full year, compared with a sharp 14.7 percent drop last year.

2/24/2010 8:53 AM NEW YORK (AP)