Saks Incorporated reported fourth-quarter 2012 earnings of 17 cents per share (excluding after-tax charges of $8.0 million or 4 cents per share), consistent with the year-ago level. However, earnings beat the Zacks Consensus Estimate by two cents backed by the company’s investments in omni channel initiatives and strategies coupled with efficient cost management.
Revenue and Margins
Net sales for the quarter rose 1.0% year over year to $934.6 million excluding the extra week in 2013, mainly on account of a 0.7% increase in same-store sales. However, quarterly revenue lagged the Zacks Consensus Estimate of $969 million.
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, women's and men's shoes, handbags, fine jewelry and fragrances.
Gross profit increased 5.8% to $368.2 million, Saks' gross margin expanded 10 basis points to 37.7% in the quarter due to a slight increase in targeted promotional activity.
Other Financial Updates
Saks ended the fourth quarter with $80.4 million in cash and equivalents, compared with approximately $74.2 million in the last quarter. Long-term debt stood at $260.6 million compared with $376.4 million in the prior quarter. As of Feb 2, 2013, consolidated inventories were $822.9 million compared with $927.1 million at the end of Oct 27, 2012.
During the quarter, the company repurchased approximately 8.5 million shares at an average price of $10.35 per share.
Full Year Updates
For the full year 2012, Saks Inc. posted earnings of 46 cents per share (excluding after-tax charges of $9.5 million or 5 cents per share) compared to 44 cents per share posted in the year-ago period. Earnings were in line with the Zacks Consensus Estimate.
Net sales for the year rose 3.1% year over year to $3.1 billion excluding the extra week in 2013, mainly on account of a 3.2% increase in same-store sales. However, full year revenue was in line with the Zacks Consensus Estimate of $969 million.
Saks expects same-store sales to grow in the range of 3% to 5% in 2013. The company expects the gross margin for the quarter of 20 to 40 basis points. Same-store inventory levels are expected to progress in the 3% to 5% range through the year.
With respect to the current capital structure, Saks expects interest expense of $34 million to $35 million for the fourth quarter. The company's effective tax rate is expected to be 40.0% for 2013.
Saks anticipates capital expenditure to be in the range of $140 million to $150 million for the full year.
Other Stocks to Consider
Saks currently holds a Zacks Rank #3 (Hold). Other stocks in the retail and wholesale sector worth considering include New York & Company Inc. (NWY - Snapshot Report) with a Zacks Rank #2 (Buy), Abercrombie & Fitch Company (ANF - Analyst Report) with a Zacks Rank #2 (Buy) and Dollar Tree Inc. (DLTR - Analyst Report) with a Zacks Rank #3 (Hold).