The company attributed the loss to after-tax charges of $56.3 million, or 42 cents per share, primarily related to writedowns related to goodwill and the disposition of Proffitt's and McRae's. Additionally, the retailer suffered from an 87% decrease in operating profits from to $ 41.4 million from $164.8 for the same period last year. Comp-store sales increased 1.9%, substantially below the chain's expectation of a mid-single digit increase, and total revenues declined 14.2% for the quarter to $1.77 billion
Saks' new CEO Stephen Sadove, who took over the position in January, called the chain's results "unacceptable" during the earnings conference call. He said that going forward he would be directly involved with the day-to-day operations at the luxury chain.
Analysts had expected a profit of 58 cents, according to Reuters Estimates.
For the fiscal year ended Jan. 28, 2006, Saks recorded net income of $22.3 million, or 16 cents per share, down from net income of $61.1 million, or 42 cents per share for the same period last year. The results included $12 million in expenses related to SEC investigations.
For the fiscal year, comp store sales grew 2.1%, and total sales declined 7.5%, primarily because of the sale of the Proffitt's/McRae's business. Excluding Proffitt's/McRae's and other depreciation, comp store sales grew 0.6%.
The chain will declare a special cash dividend of $4 per common share after the closing of the Northern Department Store Group sale later this month. Saks has also put its Parisian chain up for sale.
Sadove said that 2006 will be a transition year, during which the chain expects to incur costs related to redundant operations. However, the chain is working to "solidify its position in core markets" such as Birmingham and Detroit by opening new stores and plans to expand with two new stores in Arkansas during the next 18 months.
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