Belk Points To Investments As Q2 Profits Slip

For the fiscal second quarter ended August 1, Belk posted net income of $14.5 million versus $30.6 million in the prior-year period. Net income excluding non-comparable items totaled $21 million versus $30 million in last year’s quarter, the company reported.

Net sales were $917.4 million compared to $906.5 million in the year-earlier quarter as comparable store sales gained 1.2%. Strongest merchandise categories were men’s and women’s apparel, especially active wear across categories, according to Belk. E-commerce sales increased 35.6% in the quarter, boosting company comps by 2.1 percentage points in the period.

In announcing quarterly financial results, Belk noted that it has invested over $600 million in key strategic initiatives over the last three fiscal years. Included among them is a comprehensive omnichannel initiative that will enable the retailer to connect seamlessly with customers regardless of where they are, offer multiple ways to provide what they want, enhance their in-store shopping experience and create more personalized customer interaction, as Belk characterized it.

The company also has invested in a flagship strategy, opening such formats in new markets while expanding and remodeling operating stores in existing markets, in supply chain initiatives to align distribution capabilities as a means of maximizing sales and service, in information technology that can generate growth and profitability, and in customer service.

 On August 24, Belk, Inc. announced its acquisition by private equity firm Sycamore Partners with an estimated enterprise value at closing of approximately $3 billion.

Tim Belk, the retailer’s chairman and CEO, said, “Our positive sales trend continued in the second quarter with a 1.2% increase in comparable store sales, and we were able to maintain strong merchandising margins with inventories below last year. Back-to-school sales have been encouraging, and we believe we are well positioned for the fall. Profitability for the quarter was impacted by increased expenses due to continued heavy investments and costs associated with our recently announced merger agreement.”

Belk operates 297 stores located in 16 southern states.