Saks posts profit in 4Q on full-price sales

NEW YORK (AP) — Saks Inc. returned to profitability in its fiscal fourth quarter as the department store chain sold more items at full-price and used fewer promotions.

The results announced Wednesday support mounting evidence that luxury shoppers are beginning to spend again, as Saks posted better results at its upscale Saks Fifth Avenue stores than at its off-price OFF 5th locations.

The New York company said it is cautiously optimistic about the overall tone of its business and the way shoppers are responding to its actions. It expects an increase in a key revenue figure in 2011.

Saks' stock gained 58 cents, or 4.8 percent, to $12.75 in premarket trading. Over the past year, the shares have traded between $6.60 and $12.97.

Saks reported net income of $25 million, or 14 cents per share, for the period ended Jan. 29. That compares with a loss of $4.6 million, or 3 cents per share, a year earlier.

Adjusted earnings were 13 cents per share, which removes a penny per share for a gain tied to some Saks Fifth Avenue store closings. Analysts polled by FactSet expected earnings of 6 cents per share.

Revenue rose 7 percent to $866.3 million from $811.3 million, topping Wall Street's estimate of $854.4 million.

Saks said revenue at stores open at least a year climbed 8.4 percent in the quarter. This metric is a key indicator of a retailer's health because it measures results at existing stores instead of newly opened ones.

Saks reported strong sales of women's and men's clothing, handbags and shoes at its Saks Fifth Avenue stores. Revenue at Off 5th stores open at least a year was said to be below the company's 8.4 percent rise. Saks Direct, which includes online sales, had an approximately 36 percent increase in the figure.

Gross margin improved to 37.8 percent from 36.5 percent due to more full-price sales and fewer promotions.

Last week competitor Nordstrom Inc. reported its fourth-quarter earnings climbed, partly helped by a holiday rebound in full-price sales.

For the year, Saks reported net income of $47.8 million, or 30 cents per share. That compares with a loss of $57.9 million, or 40 cents per share, in the previous year.

Annual revenue rose 6 percent to $2.79 billion from $2.63 billion. Revenue at stores open at least a year climbed 6.4 percent.

Looking ahead, the company anticipates revenue at stores open at least a year will be in the mid-single digit range for the full year.

Saks currently has 47 Saks Fifth Avenue stores and 57 Off 5th locations.