CHICAGO Upscale department store operator Saks Inc SKS.N posted a narrower-than-expected quarterly loss on Tuesday as it trimmed costs while well-heeled shoppers held back from pricey purchases.
Saks' net loss widened to $54.5 million, or 39 cents per share, in the fiscal second quarter ended on August 1, from $32.7 million, or 24 cents per share, a year earlier.
Excluding impairments and dispositions and a gain on the extinguishment of debt, Saks lost 40 cents per share, less than analysts' average forecast of a loss of 52 cents per share, according to Reuters Estimates.
Shares of Saks, which have more than tripled in value from their March lows, rose 7.7 percent to $5.76 in premarket trading.
The recession, an unsteady stock market since September and job losses have curbed consumers' ability to spend freely in Saks' stores. To offset languishing sales, Saks has been cutting costs and trimming inventory.
Sales fell 14.5 percent to $561.7 million, with same-store sales down 15.5 percent.
Saks, which sells designer brands such as Marc Jacobs, Versace and Oscar de la Renta, said the sales decline at its New York City flagship store continued to be steeper than at other existing locations.
The current climate makes it very difficult to predict sales and gross margin performance with any certainty, Chief Executive Stephen Sadove said in a statement.
Saks expects same-store sales to fall in a mid-to-high single digit range in the second half of the year, with the third quarter being weaker than the fourth.
It still expects same-store sales to fall in a low double digit range for the full year. Same-store sales fell 22.4 percent in the first half of the year.
Saks expects gross margins to rise in the second half of the year, partly because it is carrying less inventory.
The company is also cutting other costs. It aims to spend about $55 million on capital projects this year, after spending about $75 million last year.
(Reporting by Jessica Wohl, with additional reporting by Aarthi Sivaraman in Seattle, editing by Gerald E. McCormick)