* Saks sees holiday quarter comparable sales flat
* Third-quarter adj EPS 12 cts, in line with Street view
* Third-quarter margin hurt by "modest" jump in discounting
* Saks shares down 1.2 percent
By Phil Wahba
Nov 13 Saks Inc said on Tuesday it
expects Superstorm Sandy to take a toll on business in the
holiday quarter, wiping out gains in same-store sales during
The storm , which affected stores that account for more than
half of S aks' s ales, struck the New Jersey coast on Oct. 29,
ki lling at least 121 p eople and causing fl ooding, power outages
and gasoline shortages in the Mid-Atlantic states.
Saks' flagship store on Manhattan's Fifth Avenue, which
generates about one-fifth of company-wide sales, was boarded up
and closed for two days. In total, eleven of its 45 department
stores were closed because of Sandy for between a day and a
But Chief Executive Steve Sadove reassured analysts that the
luxury chain was already recovering from the storm even though
sales were still depressed two weeks later.
"You're not going to see a long-term effect from the
hurricane," Sadove said.
Saks said it expects sales at stores open at least a year,
or same-store sales, to be flat because of Sandy.
Executives on a call said the storm had caused some
disruption to the supply chain, including delays in getting
merchandise into stores, and that Saks would extend a sales
event by a few days, compromising its gross profit in the
Shares were down 1.2 percent at $9.76 after falling as low
as $9.28 earlier in the session.
The company's sales rose 3 percent to $713.2 million in its
fiscal third quarter, ended Oct. 27, below the $726.1 million
analysts were expecting, according to Thomson Reuters I/B/E/S.
Sales at stores open at least year rose 3.3 percent, short of
the company's own forecasts.
Saks, which also operates 64 lower priced Saks Off Fifth
stores, is far more exposed to the Northeast region than are
rivals Nordstrom Inc or Neiman Marcus.
In addition to the Sandy-related slowdown, Saks is having to
contend with some hesitation among luxury shoppers to spend.
During the third quarter, Saks sales and profits were hurt
by what it called a "modest" spike in promotions, which lowered
its gross profit margin by 0.3 point to 43.9 percent of sales.
Discounts could signal shoppers were a bit more hesitant to
buy luxury items, forcing the chain to offer bargains to clear
shelves to stock them with winter items.
"This isn't going gangbusters," Morningstar analyst Paul
Swinand, said of luxury sales.
Swinand said high-end shoppers were more likely than others
to be aware of the potential threat to the U.S. economy from the
so-called fiscal cliff. That refers to the possibility of tax
cuts not being extended next year, coupled with government
The retailer reported net income of $22.6 million, or 14
cents per share, up from $17.8 million, or 11 cents per share, a
Excluding the reversal of a federal income tax reserve, Saks
earned 12 cents per share, in line with analyst estimates.
Saks' cautious holiday quarter echoes muted forecasts in
recent weeks from retailers across a wide spectrum.
TJX Cos Inc on Tuesday said it expects same-store
sales during the holiday quarter to be flat to up 2 percent,
while the midpoint of Michael Kors Holdings Inc's
profit forecast for the quarter was below analyst estimates.
Ralph Lauren Corp recently cut its full-year sales
forecast, while department store operators Kohl's Corp
and Macy's Inc each gave holiday quarter profit forecasts
that missed analyst expectations.