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UPDATE 4-Saks beats, expects holiday sales gains
November 15, 2011 / 8:01 PM / 6 years ago

UPDATE 4-Saks beats, expects holiday sales gains

* Q3 EPS 11 cents vs Street view 9 cents

* Sees Q4 comp sales up “mid-to-high single-digit” range

* Q3 gross margin up 1.6 points to 44.2 percent

* Shares up 2.1 pct

By Phil Wahba

Nov 15 (Reuters) - Luxury retailer Saks Inc forecast continued sales growth in the holiday period despite a volatile stock market, and reported a higher-than-expected quarterly profit as it offered shoppers fewer markdowns.

The department store chain expects sales at stores open at least a year to rise by a “mid-to-high single-digit” percentage rate in the final quarter that includes the Christmas season.

As previously reported, same-store sales rose 5.8 percent during the third quarter, with business at its Fifth Avenue flagship in Manhattan, which makes up one-fifth of sales, growing by a similar amount. So far this fiscal year, companywide comparable sales are up 10.3 percent.

But the rosy forecast follows October sales that missed Wall Street estimates and raised concerns that after months of rebounding luxury sales, volatile financial markets were giving even well-heeled shoppers pause.

“The financial markets have been especially volatile of late, which has resulted in deceleration in our sales trends,” Saks Chief Executive Steve Sadove said on a call on Tuesday, noting that current world affairs and the economy warranted planning “cautiously.”

Still, he said, “Our core customers held up very well.”

Those shoppers proved willing to pay full price on items, lifting Saks’ gross margin rose 1.6 percentage points to 44.2 percent in the third quarter ended Oct. 29.

But the company is not risking building up too much inventory, lest it find itself forced to slash prices if consumers turn out to be more frugal than expected. Inventory levels will rise at a more moderate pace than expected same-store sales gains.

Saks reported a net profit of $17.8 million, or 11 cents per share, for the quarter, compared with $36.3 million, or 20 cents per share, a year earlier. That was above the 9 cents a share Wall Street analysts were expecting on average, according to Thomson Reuters I/B/E/S.

Saks runs 46 department stores and a chain of 60 Off Fifth outlets.

The company’s shares were up 2.1 percent at $10.41 in afternoon trade on the New York Stock Exchange.

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