Expenses Drive Belk Q1 Net Down 30 Percent
June 4, 2013,
CHARLOTTE, N.C.-Rising expenses and reduced margin offset a sales gain to reduce Belk's first-quarter net income by 30 percent, to $28.2 million.
Selling, general and administrative expenses were up 9.9 percent in dollars and 117 basis points as a percentage of sales, to 26.8 percent. A Belk statement said the expense increase came primarily from the retailer's investments in "strategic initiatives." Gross margin fell 128 basis points to 32.5 percent, further slimming the bottom line.
Net sales in the quarter, which ended on May 4, rose 5.1 percent to $955.8 million, including a gain of 5.2 percent in same-store sales. Looking inside the top line, Belk's e-commerce sales jumped 67 percent in the quarter, boosting same-store sales by 1.6 percent.
Tim Belk, Belk's chairman and CEO, said that while the bottom line was affected by the extra expenses, the investments made in the business have helped boost sales growth. "While those investments will increase our expense in the short term, we expect them to generate strong future returns," Belk said.