(By Balaseshan) Retailer Saks Inc. (NYSE: SKS) reported a 27.2% jump in quarterly earnings on a reversal of Federal income tax reserves. However, adjusted earnings and revenue missed Street's expectations.
Earnings for the third quarter were $22.60 million or $0.14 per share, up from $17.77 million or $0.11 per share last year.
The latest quarter results included a reversal of about $3.3 million in Federal income tax reserves deemed no longer necessary. Excluding this item, the company would have recorded profit of $19.3 million or $0.12 per share.
Sales rose 3% to $713.22 million. Comparable store sales increased 3.3% for the quarter.
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Analysts, on average, polled by Thomson Reuters had expected a profit of $0.13 per share on revenue of $730.26 million for the third quarter.
The company said several merchandise categories showed sales strength during the third quarter, including women's and men's contemporary apparel, women's and men's shoes, handbags, fine jewelry, and fragrances.
The New York City flagship store sales performance was positive and generally in line with the aggregate comparable store sales performance of the company's Saks Fifth Avenue stores during the quarter, Saks noted.
Gross margin fell to 43.9% from 44.2%, relating principally to a modest increase in targeted promotional activity during the quarter.
Looking ahead into the fourth quarter, the company expects year-over-year comparable store sales to be relatively flat. This assumption is predicated on sales for the balance of the quarter returning to a growth rate similar to the comparable store sales increase posted in the third quarter.
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The company expects its year-over-year gross margin rate to be flat to down 50 basis points in the fourth quarter. As a percent of sales on a year-over-year basis, Saks projects about 20 to 60 basis points of selling, general and administrative expense leverage.
SKS is trading down 5.06% at $9.38 on Tuesday. The stock has been trading between $8.49 and $12.14 for the past 52 weeks.