Saks’ Sales Slide 13%, Loses $42.8M in 3Q
New York City Saks Inc. announced Tuesday that third-quarter losses of $42.8 million and a net-sales decline of 13% (to $698 million from $796 million a year ago) will prompt the company to cut its 2009 capital spending by 40%.
Capital expenditures will be reduced to $75 million for fiscal 2009, down from $125 million for the current year.
The cutback in capital expenditures follows similar moves by retailers, such as Target and Macy’s, in response to a dramatic pullback in consumer spending.
Saks’ announcement came as the retailer reported a wider-than-expected loss in the third quarter in contrast to a profit a year ago.
The company said it lost $42.8 million in the quarter ended Nov. 1, in comparison to a profit of $21.6 million in the year-ago period. Net sales fell 13%.
The retailer also issued a dour outlook Tuesday, predicting deteriorating profit margins in the fourth quarter amid heavy discounting. It also plans to cut spring inventory by 15% year-over-year.
“The current macroeconomic environment is unprecedented and consequently, it is impossible to predict future performance with any degree of certainty,” Stephen I. Sadove, chairman and CEO of Saks, said in a statement.
Like many luxury retailers, Saks had seen its business slow down this past summer as the economy deteriorated, but the financial crisis intensified in September, leading to massive layoffs at investment firms, sharply lower stock prices and a dramatic cutback in spending by the wealthy.
In a desperate attempt to pull shoppers in, Saks was forced to slash prices on merchandise, including new arrivals, a move that hurt its profit margins.
Same-store sales fell 5.9% in August, 10.9% in September and 16.6% in October, representing an 11.5% drop for the quarter overall.
Meanwhile, its OFF 5th outlet business fared better than the company’s average for the period, but business was “significantly below prior quarters,” according to Sadove.
Best Buy LCD TV line to earn Energy Star label
MINNEAPOLIS Best Buy has announced that its entire line of exclusive-branded Insignia LCD televisions manufactured after Nov. 1 will meet the new ENERGY STAR version 3.0 requirements, including six Insignia models which will exceed the new specification for energy-efficient televisions by 15% or more.
All Insignia LCD televisions available at Best Buy stores across the U.S. by Dec. 31 will be ENERGY STAR 3.0 certified. For more information and an updated list of brands meet the 3.0 specification, visit www.energystar.gov/products.
Klein’s Markets joins Wakefern under ShopRite banner
KEASBEY, N.J. and FOREST HILL, Md. Klein’s Family Markets, based in Harford County, Maryland, announced that it will be joining the Wakefern Food retail cooperative. With membership in the cooperative, Klein’s will transition its seven stores to the ShopRite banner.
“Transitioning to the ShopRite banner will allow us to expand our offering throughout our store including a broader selection in our meat, produce, deli and bakery departments,” noted Marshall Klein, perishable director of Klein’s Family Markets. Marshall Klein also noted that the quality of the ShopRite private label brand was another consideration when deciding to join ShopRite. “Harford County residents will now have access to more than 3,000 ShopRite branded items, including imported specialty foods, that we believe will bring a new level of quality and value to our customers,” said Klein.
The Klein family becomes the forty-fourth member of Wakefern Food Corp. and will complete their transition to the ShopRite banner by the first quarter of 2009. In addition to providing its members with procurement, warehousing and distribution services, Wakefern is the marketing and advertising arm for ShopRite.