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Saks Has Disappointing Quarter as Luxury Sales Slow

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Saks Inc (NYSE:SKS) reported an increase in losses for the second quarter to $12.3 million, or 8 cents per share, for the three-month period ending on July 28, against a loss of $8.37 million, or 5 cents per share, for the same period last year. The company suffered mainly due to the charges related to closing stores and opening a fulfillment center in Tennessee. Excluding charges, the New York based Company lost 5 cents per share in the latest quarter. However, revenues for the period rose by 5 percent to $704.1 million.  Gross margin for the company shrank a little, to 37.2% from 38% on markdowns

Saks Has Disappointing Quarter as Luxury Sales Slow

Despite an increase in spending from affluent shoppers on status goods since the recession, uncertain stock markets and the financial crisis in Europe compensated for the same. The luxury retailer even resorted to discounting, but that really did not help much.

“While the overall near-term macro environment remains uncertain, we are very excited about the future of Saks and our ability to generate continued growth,” said Stephen I. Sadove, chairman and CEO of Saks, in statement. “We remain focused on executing our core merchandising, service, and marketing strategies.”

One encouraging bit of news was an increase in revenue of 4.7 percent from stores opened at least a year, which is a good measure of growth, as it excludes the impact of stores that have opened or closed in the past 12 months. Also sales improved in Saks Merchandise categories, including women’s and men’s contemporary apparel, women’s and men’s shoes, fashion and fine jewelry, and cosmetics and fragrances,

The results, unlike the other fashion brands, were below the analysts estimate loss of 9 cents on revenue of $704.9 million, on average.  Last week Nordstrom’s, Ralph Lauren, and Macy’s posted their earnings reports, with all beating the analyst estimates. Nordstrom, Inc. (NYSE:JWN) though reported 11 percent fall in earnings but the results exceeded analysts’ expectations. Ralph Lauren Corp (NYSE:RL) reported an increase of 5 percent in net income or $1.90 per share, beating analysts estimates of $1.78 per share. Macy’s, Inc. (NYSE:M) reported a 16 percent increase in profit, or 67 cents a share, which beats analysts estimates of 64 cents a share.

The loss from Saks Inc (NYSE:SKS)’s is in contrast to the retail sales numbers release by US commerce department for July. According to the figures released retail sales for autos, furniture, and clothing rose 0.8% in July, from June.

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Aman Jain
Personal Finance Writer

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