Sinking Profits for Saks

Saks Inc. (Birmingham, Ala.) continued its precipitous drop in its fiscal fourth quarter, reporting that profits fell more than 20 percent from a year ago for the period ending Feb. 3, 2001. The department store retailer cited increased markdowns on year-end merchandise and losses related to its e-commerce operations. The company said its e-commerce losses after taxes were $7.2 million for the quarter.

Including all items and its e-commerce losses, Saks'net income tumbled more than 50 percent. Those items were related to the write-off of goodwill associated with the sale of nine stores to May Department Stores Co. (St. Louis).

Troubling market conditions had led to Saks'announcement, in February, that it would not go through with previously announced plans to separate its Saks Fifth Avenue and department store businesses. It pointed to “materially” worse conditions in the luxury retailing sector, leading to a slip in what would be the market value of a luxury retail stock.

Saks Inc., formerly Proffitt's, is the result of a buying spree in the 1990s that has led to a chain of more than 350 stores in about 40 states. The mostly regional chains, concentrated in the Southeast and Midwest, operate under the Parisian, Younkers, Carson Pirie Scott, McRae's, Proffitt's, Herberger's, Boston Store and Bergner's nameplates. The company bought luxury retailer Saks Holdings, including the gemstone Saks Fifth Avenue, in 1998 and adopted the Saks name.