Birmingham, AL, March 1, 2006-- Saks Inc., in its fourth quarter reported a loss, reversing a year-earlier profit, as results were hurt by charges related to its ongoing sell-off of parts of its department store operations.
The company also said it would pay out a special $4 cash dividend once upon completion of the sales of the Northern Department Store Group, expected to occur by March 13th. Saks' shares rose $0.40, or 2 percent, to $19.30 in premarket activity.
For the quarter ended Jan. 28, Saks reported a loss of $2.2 million, or $0.02 per share, versus a prior-year profit of $96.6 million, or $0.68 per share. Revenue fell to $1.77 billion from $2.07 billion a year ago, due to the sale of the Proffitt's and McRae's business in July 2005.
The quarter's results reflect charges of $56.3 million for writing down the value of goodwill and other assets in Saks' department store group, which reduced profit by $0.42 per share, as well as expenses for legal and employee retention and severance.
Over the past year, Saks has been shedding its mid-tier regional department store chains in order to focus on its high-end department store business. Most recently, Saks said in January it was exploring strategic alternatives for its Parisian chain; in October 2005, the company said it would sell its Northern Department Store Group to Bon-Ton Stores Inc., for $1.1 billion in cash plus the assumption of $85 million of debt.
Sales in stores open at least one year--a closely watched performance gauge called comparable sales--rose 1.9 percent.
Looking ahead, Saks projected same-store sales in 2006 would increase in the low-to-mid single digit range for Saks Fifth Avenue Enterprises, comprising the high-end department store business.
The retailer also called 2006 a "transition year," adding it expects to incur more costs related to redundant operations.
