Save Libby Lu

Saks Inc. (Birmingham, Ala.) reported a net income of $0.2 million for the third quarter ended Oct. 29, 2005. That compares with a loss of $30.4 million a year ago.

Total revenues declined 11.2 percent for the quarter, reflecting the sale of the Proffitt’s/McRae’s business, and same-store sales increased 2.7 percent.

The Saks Fifth Avenue Enterprises (SFAE) operation showed a 22 percent decline in operating income for the quarter, but same-store sales increased 5.4 percent and total sales were essentially flat. “We are pleased to note that our New York flagship store, which comprises nearly 20 percent of SFAE’s revenues, achieved another significant increase in sales for the quarter on top of a very strong performance last year,” said SFAE chairman and ceo Fred Wilson.

Club Libby Lu, the pre-teen specialty retail chain acquired in May 2003, has been taken off the market. Saks has terminated the strategic possibility of selling the 56-store chain that was announced in April 2005 and has determined that it is appropriate to retain the business. “With the disposition of the Proffitt’s/McRae’s business and the planned sale of NDSG,” said the company, “the in-store growth strategy is no longer appropriate for Club Libby Lu. The company will continue to operate the existing store-in-store locations, but going forward it will principally focus on growth via the standalone mall-based business model.

“We believe there are both domestic and international growth opportunities for this exciting and unique specialty store concept,” said Saks Inc. chairman and ceo Brad Martin. “New-store growth will moderate in the near term as the Club Libby Lu team focuses on comparable store sales growth and operating income expansion.”

The company also reported that the Saks Fifth Avenue store in New Orleans, which suffered substantial water, fire and other damage related to Hurricane Katrina in late August 2005, is expected to reopen in the third fiscal quarter of 2006 after necessary repairs and renovations are made to the property. Wilson noted, “Saks Fifth Avenue has built a great franchise in New Orleans, and we have many loyal customers and associates there. We are committed to this great city, and we are working diligently to return to this important market as soon as possible.”

The store is covered by both property damage and business interruption insurance. The property damage coverage will pay to repair and/or replace the physical property damage and inventory loss and the business interruption coverage will reimburse the company for lost profits as well as continuing expenses related to loss mitigation, recovery and reconstruction for the full duration of the reconstruction period plus three months.