Hurricane Sandy weighs on Saks despite Q3 profit jump

Luxury retailer Saks Incorporated said it remains cautious in its outlook for the rest of the year as the aftermath of Hurricane Sandy takes its toll.

The retailer expects same-store sales to be flat in the fourth quarter, with the impact of the storm leading to “soft” sales in the first two weeks of November, a decline in online sales in the Northeast of the country, and more than half of its store revenue base affected.

Eleven of the company’s 45 Saks Fifth Avenue stores and 15 of its Off Fifth stores were closed for at least a day and as many as seven days, including its New York flagship.

The update came as the retailer posted a third-quarter profit of $22.6 million or $0.14 per share, compared with $17.8 million, or $0.11 per share, a year earlier. Excluding a reversal of $3.3 million in Federal income tax reserves, the retailer said it would have recorded a profit of $19.3 million or $0.12 per share.

Sales in the three months to October 27 rose 3.0% to $713.2 million, up from $692.3 million a year ago. Comparable store sales increased 3.3% in the quarter, although this came in below initial expectations.

Gross margin rate slipped to 43.9% from 44.2% on the back of higher promotional activity.

Strong-performing merchandise categories included women’s and men’s contemporary apparel, and women’s and men’s shoes.

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