UPDATE 1-Saks beats Street on reduced discounting;shares up

Tue May 18, 2010 8:26am EDT

* Q1 EPS 12 cents vs Street view 5 cents

* Q1 same store-sales up 6.1 pct

* Sees FY same-store sales up by "mid-single digits"

* Shares up 6.5 percent in premarket trading

NEW YORK, May 18 (Reuters) - Saks Inc SKS.N reported a stronger-than-expected quarterly profit on Tuesday as luxury spending rebounded strongly and the upscale retailer benefited from less discounting.

Shares were up 6.5 percent in light premarket trading on Tuesday on the New York Stock Exchange.

Saks reported net income of $18.8 million, or 11 cents per share, during that quarter that ended May 1, compared to a loss of $5.1 million, or 4 cents a share, a year earlier.

Excluding severance and store closing costs, Saks reported a profit of 12 cents per share. On average, analysts were expecting first-quarter profit of 5 cents per share on sales of $662.9 million, according to Thomson Reuters I/B/E/S.

Saks said sales at stores open at least a year, a gauge of retail health known as same-store sales, rose 6.1 percent during the first quarter.

Looking ahead, Saks forecast same-store sales would rise in the "low-to-mid single digit" range for the second quarter, and in the "mid-single digit range" for its full fiscal year.

Overall sales were up 6.9 percent to $667.4 million. Gross margins rose 4.4 percentage points to 43.1 percent from a year earlier, as the company increased full-price selling. (Reporting by Phil Wahba, editing by Dave Zimmerman)

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