Saks Inc. (NYSE: SKS) this morning shared in-line earnings results for the third quarter but warned that fourth-quarter results would take a hit due to Hurricane Sandy.
The New York-based department store operator posted adjusted earnings per share (EPS) of $0.12 on revenues of $713.2 million for the quarter. In the same period a year ago, it reported a EPS of $0.11 per share on revenue of $692.3 million. This quarter's results also compare with the Thomson Reuters estimates for adjusted EPS of $0.12 and $726.1 million in revenues.
Chairman and Chief Executive Officer Stephen I. Sadove said:
Our comparable store sales increase of 3.3% in the third quarter was below our initial expectation but was on top of a very solid 5.8% comparable store sales increase in the prior year third quarter. On a year-to-date basis, comparable store sales increased 4.3%, and similarly, this was on top of very strong 10.3% increase in the first nine months of last year.
The gross margin rate slipped to 43.9% in the third quarter from last year's third quarter rate of 44.2%. Saks attributed the gross margin rate decline to an increase in targeted promotional activity during the quarter.
Sadove also said:
[S]ales trends have been soft for the first two weeks of November in the aftermath of Hurricane Sandy. Many of our stores, representing about 40% of our total company revenues, were directly impacted by the storm, and we have experienced a decline in saks.com sales generated from our customers in the Northeast. Additionally, sales in a number of our other stores, particularly in Florida, were indirectly affected by the storm, as many of our Northeastern customers have ties to those markets. In aggregate, we estimate that Hurricane Sandy impacted about 55% of our total company store revenue base.
Saks now expects fourth-quarter EPS to be flat year-over-year, or about $0.17 per share. The Thomson Reuters forecast calls for $0.21 per share earnings on $1.01 billion in sales.
Shares are down about 1% in premarket trading to $9.78. The 52-week range is $8.49 to $12.14. Before this morning's report, the mean price target was $11.25.
Filed under: 24/7 Wall St. Wire, Earnings, Earnings Warning, Retail Tagged: SKS