Saks Reports Higher Sales

Saks Inc. (SKS) reported total sales of $393.6 million for the month of December 2009, which was 11.1% higher than $354.4 million in the same period a year ago. The company’s comparable store sales grew 9.9% for the five weeks ended Jan 2, 2010, as it benefited from a designer clearance event.
 
During the five week period, the company saw growth in women’s designer and “gold range” apparel, men’s sportswear, women’s shoes, and handbags. According to Saks, the weakest categories for December were fine jewelry, intimate apparel, men’s contemporary apparel, men’s accessories, and cosmetics.
 
Saks’ sales totaled $638.8 million for the first two months of fiscal fourth quarter. On a quarter-to-date basis, sales were down 6.3% from $681.8 million posted in the comparable period of last fiscal year. Comparable store sales fell 7.3% for the two-month period. This was due to a 26.1% decline in comparable store sales in November, as the company saw weakness in almost all merchandise categories. The company now estimates that comparable store sales will decline in the mid-single digit range for the full quarter.
 
For the first eleven months of fiscal 2010, the company’s sales were $2.43 billion, compared to $2.86 billion in the same period of fiscal 2009, representing a year over year drop of 14.8%. Year to date comparable store sales were down 15.9% due to weakness across all merchandise categories, geographies, and channels of distribution.
 
The economy is still weak and unemployment levels remain high. Given the uncertainty in the economy, customers are staying away from discretionary items. It would take more than a couple of quarters for Saks to see a substantial improvement in its sales.
 
We maintain a Neutral recommendation on the stock.

Read the full analyst report on SKS