Saks 1st-qtr loss beats forecast; TJX posts profit

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NEW YORK — Saks Inc. said Tuesday that its cost cutting left it with a smaller loss than expected in the first quarter, but demand remains weak for its luxury offerings, while discounter TJX Cos. earned 8 percent more than a year earlier as frugal shoppers took advantage of bargains.

Saks, which operates Saks Fifth Avenue, reiterated its weak sales outlook and is pressing for more cuts as it navigates the recession. TJX, which operates TJ Maxx, Marshalls and HomeGoods, said its profit in the current quarter could beat Wall Street estimates.

TJX said it will open 85 new stores this year, 15 to 20 more than it originally planned and test the market in Poland by opening three new stores there later this year.

Saks shares rose 21 percent, or 87 cents, to $4.95 on Tuesday as investors were encouraged by the smaller-than-expected loss, while shares of Framingham, Mass.-based TJX increased 4 percent, or $1.12, to $29.06.

"Saks and TJX are the perfect metaphor of what has been going on in the market for the last year," said Ken Perkins, president of RetailMetrics LLC. "Consumers are focusing on necessities and value.... It makes no sense to go to Saks or Neiman Marcus to pay top dollar for a brand name in this environment."

Saks said it lost $5.1 million, or 4 cents per share, in the first quarter ended May 2. That compares with a profit of $17.3 million, or 12 cents per share, a year earlier.

Revenue fell 27 percent to $621.3 million, from $850 million a year earlier. Sales at stores open at least a year, known as same-store sales, dropped almost 28 percent. Same-store sales are considered a key indicator of a retailer's health.

Analysts expected a loss of 26 cents per share on revenue of nearly $620 million.

Diego Della Valle, founder of Italian luxury shoe and handbag maker Tod's SpA, became Saks' second-largest shareholder in recent weeks with a stake of nearly 6 percent, according to a filing last week with the Securities and Exchange Commission.

Mexican billionaire Carlos Slim holds the largest stake in the company.

Chairman and Chief Executive Stephen I. Sadove told investors during a conference call Tuesday that he expects "the macroeconomic picture will remain extremely difficult for the balance of 2009, if not beyond, and we are continuing to plan accordingly."

After the tough holiday shopping season, New York-based Saks said in January that it would eliminate 1,100 jobs, or 9 percent of its work force, and make other cuts this year. The job cuts followed the retailer's announcement in November that it would discontinue its Club Libby Lu specialty apparel chain, which employed about 1,700.

Sadove said Tuesday that Saks now expects to cut expenses by about $60 million this year across most of the business, though it still is enhancing customer service. He said the company announced some salary reductions Tuesday morning.

Saks also is developing exclusive merchandise with its key vendors and working with designers to lower prices.

The luxury business has not shown any marked improvement even as the stock market has started to rally.

Saks reiterated its full-year forecast that same-store sales will drop by low double-digit percentages, with the decline slowing in the second half of the fiscal year.

TJX said its earnings climbed to $209.2 million, or 49 cents per share, for the period that ended May 2, up from $193.8 million, or 43 cents per share, a year ago.

While the recession has brought shoppers to TJX stores, President and Chief Executive Carol Meyrowitz also credited the company's conservative same-store sales plans, tight inventory management and cost control efforts for helping its quarterly results.

TJX's sales edged up 1 percent to $4.35 billion from $4.3 billion.

Among its stronger performers were A.J. Wright in the U.S., T.K. Maxx in Germany and HomeSense in the U.K.

The minimal sales growth was due in part to the stronger dollar, which — combined with mark-to-market adjustments on inventory-related hedges — lowered earnings by 4 cents per share.

Same-store sales increased 2 percent.

TJX expects second-quarter earnings of 43 cents to 49 cents per share. The forecast assumes same-store sales will be flat or drop 2 percent. Analysts predict profit of 43 cents per share in the second quarter.

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AP Retail Writer Michelle Chapman in New York and Business Writer Colleen Barry in Milan, Italy, contributed to this report.

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	Saks posts smaller 1st-quarter loss than expected	Associated Press	Mon May 18	0
	TJX 1Q profit climbs 8 percent as sales improve	Associated Press	Tue May 19	0