Saks said sales at stores open at least a year rose 3.4 percent in February, better than the 0.2 percent decline analysts had expected, according to Reuters Estimates.
ATLANTA (Reuters) - Upscale retailers Saks Inc <SKS.N> and Neiman Marcus reported higher quarterly profits on Wednesday, but both companies said that recent sales had softened as consumers become more cautious about spending.
Saks said sales at stores open at least a year rose 3.4 percent in February, better than the 0.2 percent decline analysts had expected, according to Reuters Estimates.
But the operator of Saks Fifth Avenue stores said same-store sales in January and February had softened from the 9 percent rise in the fourth quarter.
Neiman Marcus said its same-store sales fell in February.
!ADVERTISEMENT!Both retailers said the spending slowdown was broad-based but more evident among lower-end shoppers.
"Our sense is that the aspirational customer has pulled back somewhat in response to concerns about the U.S. economy and stock and housing markets," Neiman Marcus Chief Executive Burton Tansky said during a conference call.
He added that luxury customers had also adopted a more cautious stance.
Saks Chairman Steve Sadove said sales in several previously high-growth rate categories such as handbags, footwear and men's goods had slowed.
"The good zone of business has been weaker for longer than the higher end of business," Sadove said during a conference call. "But across all zones of business, you're seeing a slowing."
Saks forecast that same-store sales would rise in the mid-single-digit percentage range for the year, but added that it expects a "modest decrease" in its gross margin rate.
The company, which is renovating stores and expanding commission programs for store workers, also said it expects operating margins to reach 8 percent over time from 4 percent for 2007. Capital spending this year will drop to $125 million from about $141 million a year earlier.
"We think Saks' plan to scale back capital spending this year will enable it to maintain healthy cash flow, in view of recent weakening in sales trends," Standard & Poor's Equity analyst Jason Asaeda said in a note.
Earnings at Saks were $39.5 million, or 26 cents a share, for the fourth quarter ended February 2, compared with $21.5 million, or 14 cents a share, a year earlier.
Excluding items that led to a gain of 7 cents a share, Saks' profit was 19 cents a share, a penny below the 20 cents expected by analysts, according to Reuters Estimates.
Saks said quarterly sales rose 4.7 percent to $999.7 million.
At Neiman Marcus, profit rose to $44.3 million for the fiscal second quarter ended January 26 from $41.0 million a year earlier. The private retailer said markdowns taken to align inventory levels with demand hurt gross margin.
Neiman also said same-store sales for its namesake and Bergdorf Goodman stores fell 7.4 percent in February, while total revenue fell 5.4 percent to $288 million in the month.
Neiman Marcus was confident that the luxury buyer would keep spending despite the weakening U.S. economy.
"The affluent customer is resilient. For them, downtimes are merely a moment in time and do not signal a lifestyle change," Tansky said.
Saks, which had takeover interest last year from Icelandic retail holding company Baugur Group, said it could not comment on merger and acquisition activity.
Saks shares were down 12 cents at $15.37 in afternoon trading on the New York Stock Exchange.
(Reporting by Karen Jacobs, Editing by Toni Reinhold)
