Digital driving growth at Belk department stores

Online sales at regional department store operator Belk grew 43% during the second quarter, prompting the company to announce a major investment in its e-commerce and fulfillment capabilities.

The Charlotte, N.C.-based operator of 299 department stores said sales for its second quarter ended August 2 increased 0.8% to $906.5 million. Same store sales increased 0.6% and were aided by a 43.1% increase in online sales which positively affected comps by 1.8%. Profits were essentially flat with the prior year at $30.6 million as investments in strategic initiatives weighed on profitability.

“While the beginning of the quarter was soft, sales trends improved during the quarter with July being the strongest month.  Merchandising margins were higher than last year with lower inventories, which positions the company well for the fall season.  Digital continues to be our fastest growing business,” said Tim Belk, chairman and CEO of the family owned retailer.
The best performing merchandise categories during the quarter included children’s shoes, ladies contemporary and better sportswear, juniors and children’s apparel.

In addition to investments in store remodeling and expansion projects, a major initiative is underway to bolster the company’s e-commerce capabilities. A 515,000-sq.-ft. existing e-commerce distribution and fulfillment center in Jonesville, S.C. is being expanded by 345,000-sq.ft. at a cost of roughly $47 million. When the expansion is complete in January 2015 the facility will feature increased capacity, greater automation and material handling equipment to improve efficiency.

The DC investment is part of a larger three year, $700 million program that began this year with a focus on enhancing omnichannel capabilities and pursuing a flagship store strategy designed to create compelling physical experiences. Belk also plans to increase personalized customer experiences and open more stores in new and existing markets.

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