Anne D'Innocenzio
November 18, 2008 - 09:18 a.m.
NEW YORK (AP) - Luxury retailer Saks Inc. reported a wider-than-expected loss in the third quarter in contrast to a year-ago profit, viewed like its branch customers slashed spending surrounded by massive job losses on Wall Street and shrinking stock portfolios linked to the financial meltdown.
The New York-based retailer which operates Saks Fifth Avenue furthermore issued a dour outlook Tuesday, predicting deteriorating profit margins in the fourth proper position together heavy discounting. It also plans to divide source inventory by 15 percent year-over-year and has reduced its capital expenditures by 40 percent for next year.
"The current macroeconomic environment is unprecedented and consequently, it is impossible to divine future performance with any degree of certainty, " Stephen I. Sadove, chairman and CEO of Saks, said in a statement.
Saks reported a loss of $42.8 million, or 31 cents per share, for the quarter ended Nov. 1. That compares through a return of $21.6 million, or 14 cents per share, in the year-ago period.
Net sales fell 13 percent to $698 million from $796 the multitude a year ago.
Analysts surveyed by Thomson Reuters expected a smaller loss of 3 cents a share on higher revenue of $712.7 million.
Like many luxury retailers, Saks had seen its business slow down this past summer as the economy deteriorated, mete the financial crisis intensified in September, leading to massive layoffs at investment firms, sharply lower stock prices and a dramatic cutback in spending by the moneyed.
In a desperate attempt to pull shoppers in, Saks was forced to slit prices on merchandise, including new arrivals, a move that hurt its profit margins.
Sales at its stores open at least a year fell at an increasing pace of 5.9 percent in August, 10.9 percent in September and 16.6 percent in October. That represents an 11.5 percent ear-ring for the quarter overall against the 11.4 percent same-store sales gain a year ago.
Same-store sales are a key indicator of a retailer's soundness.
In particular, Sadove well-known that the New York flagship great quantity, which accounts concerning approximately 20 percent of the company's overall sales, faced challenges. The store has traditionally outperformed the balance of its store base, but in the latest quarter, sales at the store fared only slightly better than the company average.
During the quarter, Sadove noted that the chain continued to experience "widespread weakness" in women's apparel and softness in areas such as women's shoes and handbags that had delivered explosive growth during 2008. Some of the relatively better performing categories for Saks Fifth Avenue for the time of the quarter included cosmetics, fragrances, jewelry, men's contemporary sportswear and men's shoes.