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8-K - FORM 8-K - BELK INC | g25381e8vk.htm |
Exhibit 99.1
News Release
Contact: Ralph Pitts, Belk, Inc., 704-426-8402, ralph_pitts@belk.com
Belk, Inc. Reports Third Quarter Results
| Comparable Store Sales Increase 2.5 Percent (+ 4.4 Percent Year-to-Date) | |
| Results Reflect Investments in Re-branding and other Strategic Initiatives |
CHARLOTTE, N.C., Nov. 23, 2010 Belk, Inc. today reported an increase of 2.5 percent in
comparable store sales for its fiscal third quarter ended Oct. 30, 2010 over the same 13-week
prior-year period. Belk reported total sales of $746.6 million sales, up 2.6 percent for the
period.
Tim Belk, chairman and chief executive officer of Belk, Inc., said, This is our third consecutive
quarter of comparable store sales growth with solid margins. We are investing in strategic areas,
including branding, IT infrastructure and merchandising headcount, which have raised our costs for
the quarter but which we believe will boost performance over the long term. We are encouraged by
our profitability to date and are positive about the remainder of the year.
Belks year-to-date sales totaled $2,338.2 million, an increase of 4.0 percent compared with the
same 39-week period last year. On a comparable store sales basis, year-to-date sales increased 4.4
percent over the prior-year period. Top performing merchandise categories for the quarter included
shoes, mens and childrens apparel, and home furnishings.
A $4.2 million net loss was reported for the third quarter compared to net income of $0.4 million
for the same 13-week period last year. The decrease was due primarily to increased expense of
approximately $11 million, of which approximately $10 million reflected costs that were incurred
during the period for the companys re-branding and other corporate strategic initiatives.
Excluding non-comparable gains and losses, asset impairments and store closing costs, the net loss
was $6.1 million compared to net income of $1.3 million for the same 13-week period last year. A
detailed reconciliation of net income to net income excluding non-comparable items is provided at
the end of this release.
Year-to-date net income was $32.6 million compared to $10.4 million for the same 39-week period
last year. Net income excluding non-comparable items referred to above was
$30.5 million compared to $11.8 million for the same 39-week period last year.
Re-Branding Launch
Belk launched a company-wide re-branding and corporate marketing initiative in October that
includes a new logo and tag line, Modern. Southern. Style. Signs are being installed in 60 stores
before year-end with the balance scheduled for installation by November 2011. Newly designed
charge cards were issued in October to Belk Elite and Premier customers, to be followed by Belk
Rewards cardholders in March 2011.
Belks new corporate identity is being supported by an extensive branding and advertising campaign
that includes market-wide television and print advertising, circulars, direct mail and social
media, all of which incorporate Belks new graphic elements and brand messages.
-More-
Belk, Inc. News Release | Page 2
About Belk, Inc.
Charlotte, N.C.-based Belk, Inc. (www.belk.com) is the nations largest privately owned mainline
department store company with 305 Belk stores located in 16 Southern states. The company was
founded in 1888 by William Henry Belk in Monroe, N.C., and is in the third generation of Belk
family leadership. Its belk.com Web site offers a wide assortment of fashion apparel, shoes and
accessories for the entire family along with top name cosmetics, a wedding registry and a large
selection of quality merchandise for the home.
Modern. Southern. Style.
Belk seeks to satisfy the modern Southern lifestyle like no one else, so that our customers get the
fashion they desire and the value they deserve. Our vision is for the modern Southern woman to
count on Belk first for her, for her family, for life.
Belk Social Media
To connect with Belk via its Facebook page, Fashion Buzz Twitter feed, mobile phone text message
updates or by email, go to: http://www.belk.com/getconnected.
Notes:
To provide clarity in measuring Belks financial performance, Belk supplements the reporting of
its consolidated financial information under generally accepted accounting principles (GAAP) with
the non-GAAP financial measure of net income excluding non-comparable items. Belk believes that
net income excluding non-comparable items is a financial measure that emphasizes the Companys
core ongoing operations and enables investors to focus on period-over-period operating performance.
It is among the primary indicators Belk uses in planning and operating the business and
forecasting future periods, and Belk believes this measure is an important indicator of recurring
operations because it excludes items that may not be indicative of or are unrelated to core
operating results.
Belk also excludes such items when evaluating company performance in connection with its incentive
compensation plans. In addition, this measure provides a better baseline for modeling future
earnings expectations and makes it easier to compare Belks results with other companies that
operate in the same industry. Net income is the most directly comparable GAAP measure. The
non-GAAP measure of net income excluding non-comparable items should not be considered in
isolation or as a substitute for GAAP net income.
Certain statements made in this news release are forward-looking statements within the meaning of
the federal securities laws. Statements regarding future events and developments and the Companys
future performance, as well as our expectations, beliefs, plans, estimates or projections relating
to the future, are forward-looking statements within the meaning of these laws. You can identify
these forward-looking statements through our use of words such as may, will, intend,
project, expect, anticipate, believe, estimate, continue, or other similar words.
Certain risks and uncertainties that may cause our actual results to differ significantly from the
results we discuss in our forward-looking statements include, but are not limited to: general
economic, political and business conditions, nationally and in our market areas; our ability to
anticipate the demands of our customers for a wide variety of merchandise and services, including
our predictions about the merchandise mix, quality, style, service, convenience and credit
availability of our customers; unseasonable and extreme weather conditions in our market areas;
seasonal fluctuations in quarterly net income due to the significant portion of our revenues
generated during the holiday season in the fourth fiscal quarter and the significant amount of
inventory we carry during that time; competition from other department and specialty stores and
other retailers; our ability to effectively use advertising, marketing and promotional campaigns to
generate high customer traffic in our stores; the success and effectiveness of our re-branding; our
ability to find qualified vendors from which to source our merchandise and our ability to access
products in a timely and efficient manner from a wide variety of domestic and international
vendors; the income we receive from, and the timing of receipt of, payments from GE, the operator
of our private label credit card business; our ability to correctly anticipate the appropriate
levels of inventories during the year; our ability to manage our expense structure; our ability to
identify opportunities to open new stores, or to remodel or expand existing stores; the efficient
and effective operation of our distribution network and information systems to manage sales,
distribution, merchandise planning and allocation functions; our ability to expand our eCommerce
business through our updated and redesigned belk.com website, including our ability to meet the
systems challenges of expanding and operating the website and our ability to efficiently operate
our eCommerce fulfillment facility; our ability to realize the planned efficiencies from our
acquisitions and effectively integrate and operate the acquired stores and businesses; the
effectiveness of third parties in managing our outsourced business processes and our ability to
comply with debt covenants which could adversely affect our capital resources, financial condition
and liquidity and our ability to re-finance existing debt as necessary on acceptable terms.
For additional information on these and other risk factors, see the section captioned This Report
Contains Forward-Looking Statements in our Annual Report on Form 10-K for the fiscal year ended
January 30, 2010 and in other filings with the Securities and Exchange Commission. We believe
these forward-looking statements are reasonable. However, you should not place undue reliance on
such statements. We undertake no obligation to publicly update or revise any forward-looking
statement, even if future events or new information may impact the validity of such statements.
Belk, Inc. News Release | Page 3
BELK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Thirteen Weeks Ended | Thirty-nine Weeks Ended | |||||||||||||||
October 30, | October 31, | October 30, | October 31, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(millions) |
||||||||||||||||
Revenues |
$ | 746.6 | $ | 728.0 | $ | 2,338.2 | $ | 2,249.1 | ||||||||
Cost of goods sold (including occupancy, distribution and buying expenses) |
515.8 | 496.5 | 1,584.4 | 1,550.9 | ||||||||||||
Selling, general and administrative expenses |
227.1 | 215.8 | 670.5 | 642.2 | ||||||||||||
Gain on sale of property and equipment |
2.7 | 0.6 | 4.5 | 1.6 | ||||||||||||
Asset impairment and exit costs |
0.1 | (0.1 | ) | 1.3 | 1.0 | |||||||||||
Pension curtailment charge |
| 2.7 | | 2.7 | ||||||||||||
Operating income |
6.3 | 13.7 | 86.5 | 53.9 | ||||||||||||
Interest expense, net |
(12.1 | ) | (12.9 | ) | (37.7 | ) | (38.3 | ) | ||||||||
Income (loss) before income taxes |
(5.8 | ) | 0.8 | 48.8 | 15.6 | |||||||||||
Income tax expense (benefit) |
(1.6 | ) | 0.4 | 16.2 | 5.2 | |||||||||||
Net income (loss) |
($4.2 | ) | $ | 0.4 | $ | 32.6 | $ | 10.4 | ||||||||
BELK, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME AND
NET INCOME EXCLUDING NON-COMPARABLE ITEMS
(unaudited)
RECONCILIATION OF NET INCOME AND
NET INCOME EXCLUDING NON-COMPARABLE ITEMS
(unaudited)
Thirteen Weeks Ended | Thirty-nine Weeks Ended | |||||||||||||||
October 30, | October 31, | October 30, | October 31, | |||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(millions) |
||||||||||||||||
Net income (loss) |
($4.2 | ) | $ | 0.4 | $ | 32.6 | $ | 10.4 | ||||||||
Gain on sale of property andequipment, net of income tax |
(1.9 | ) | (0.3 | ) | (3.0 | ) | (1.0 | ) | ||||||||
Asset impairment and exit costs, net of income tax |
| (0.1 | ) | 0.9 | 0.6 | |||||||||||
Pension curtailment charge, net of income tax |
| 1.3 | | 1.8 | ||||||||||||
Net income (loss) excluding non-comparable items |
($6.1 | ) | $ | 1.3 | $ | 30.5 | $ | 11.8 | ||||||||