) reported first-quarter 2013 earnings of 19 cents per share
(excluding after-tax charges of $10.1 million or 6 cents per
share). The results were consistent with the year-ago level due
to a modest same-store sales growth and a steady gross margin
rate. Earnings were also in line with the Zacks Consensus
Revenues and Margins
Net sales for the quarter rose 5.3% year over year to $793.2
million excluding the extra week in 2013, mainly on account
of a solid 4.2% increase in same-store sales. Quarterly revenues
also came well above the Zacks Consensus Estimate of $779.0
The company's stores and operations comprise Saks Fifth Avenue
(these are principally free-standing stores in exclusive shopping
destinations or anchor stores in upscale regional malls), Saks
Fifth Avenue OFF 5th (these stores primarily target
value-conscious customers) and Saks Fifth Avenue e-commerce
operations known as Saks Direct.
During the quarter, the company's stores witnessed strong sales
growth, particularly in women's and men's contemporary apparel
and advanced designer apparel; dresses; women's shoes; handbags;
children's apparel; and men's accessories, shoes, and
Gross margin remained flat at 44.4% compared to the year-ago
level as higher sales were offset by higher cost of sales during
the quarter. Operating margin declined 160 basis points to 7.0%
due to increase in selling, general and administrative expenses
and investment in omni channel initiatives.
Other Financial Updates
Saks ended the first quarter with $20.1 million in cash and
equivalents, compared with approximately $80.4 million as of Feb
2, 2013. Long-term debt stood at $216.3 million compared with
$260.6 million as of Feb 2, 2013. As of May 4, 2013, consolidated
inventories were $856.4 million compared with $822.9 million at
the end of Feb 2, 2013.
During the quarter, the company repurchased shares worth $250,000
at an average price of $10.52.
Saks expects same-store sales to grow in the range of 4% to 6% in
2013 instead of the 3% to 5% announced previously. The company
expects the gross margin to be relatively flat for the rest of
year. Same-store inventory levels are expected to progress in the
4% to 5% range through the year instead of the 3% to 5% range
With respect to the current capital structure, Saks expects
interest expense of $23 million to $24 million for the year. The
company's effective tax rate is expected to be 41.0% for 2013
instead of 40% as expected previously.
Saks anticipates capital expenditure to be in the range of $145
million to $155 million for the full year instead of $140 million
to $150 million as anticipated previously.
Saks currently holds a Zacks Rank #3 (Hold). Other stocks in the
retail and wholesale sector worth considering include
Stein Mart Inc.
) with a Zacks Rank #1 (Strong Buy), and both
The Gap Inc.
The Buckle Inc.
) with a Zacks Rank #2 (Buy).
BUCKLE INC (BKE): Free Stock Analysis Report
GAP INC (GPS): Free Stock Analysis Report
SAKS INC (SKS): Free Stock Analysis Report
STEIN MART INC (SMRT): Free Stock Analysis
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