Saks Reports First Fourth-Quarter Profit in 3 Years on Handbags

Saks Inc., the New York-based luxury retail chain, reported its first fourth-quarter profit in three years as improved consumer confidence prompted customers to splurge on apparel and handbags again during the holiday season. Net income was $25 million, or 14 cents a share, in the three months ended Jan. 29, compared with a net loss of $4.61 million, or 3 cents, a year earlier, the retailer said in a statement today. Profit excluding store closings was 13 cents. Ten analysts estimated 8 cents on average in a Bloomberg survey. Luxury consumers increased spending during the holidays after stock markets improved and the U.S. economy recovered from the longest recession since the Great Depression. Saks said it saw rising demand for women’s and men’s clothes, purses and shoes. It forecast a mid-single digit increase in percentage terms in sales at stores open at least a year in 2011. Goldman Sachs analysts had predicted a low-to-mid single digit growth for comparable sales. The shares dropped 31 cents, or 2.6 percent, to $11.86 at 4 p.m. in New York Stock Exchange composite trading, reversing a gain earlier in the day, as U.S. stock markets fell amid concern that rising energy costs will slow economic growth. Saks has advanced 11 percent this year. Fourth-quarter sales rose 6.8 percent to $866.3 million, Saks said, after gaining 4.3 percent in the third quarter and slumping 3.4 percent in the fourth quarter of 2009. Same-store sales increased 8.4 percent last quarter. Saks operates 47 Saks Fifth Avenue Stores and 57 Off 5th stores.