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8-K - 8-K - BELK INC | g27988e8vk.htm |
Exhibit 99.1
News Release Contact: Ralph Pitts, Belk, Inc., 704-426-8402, Ralph_Pitts@belk.com |
Belk, Inc. Reports Second Quarter Operating Results
§ | Comparable Store Sales Increase 5.2 Percent | ||
§ | Net Income Grows 101.6 Percent |
CHARLOTTE, N.C., August 25, 2011 Belk, Inc. today announced operating results for its
fiscal second quarter ended July 30, 2011.
Net Sales
Net sales for the 13-week period increased 5.6 percent to $831.8 million compared to the same
prior-year period. The increase resulted from a continuation of improved sales trends in both store
and eCommerce sales. On a comparable store basis, sales increased 5.2 percent.
Belks year-to-date sales totaled $1,680.4 million, an increase of 5.6 percent compared with the
same 26-week prior year period. On a comparable store sales basis, year-to-date sales increased 5.5
percent over the prior-year period.
Net Income
Second quarter net income grew 101.6 percent to $25.0 million compared to the same period last
year. Net income excluding non-comparable items increased 93.5 percent to $24.0 million compared to
the same prior-year period. 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 increased to $56.9 million compared to $36.8 million for the same 26-week
period last year. Net income excluding non-comparable items was $55.5 million compared to $36.5
million for the same 26-week period last year.
Tim Belk, chairman and chief executive officer of Belk, Inc., said, We are pleased to report
another quarter of strong growth in comparable store sales, healthy merchandise margins and
increased profitability. Ecommerce is growing most quickly, followed by shoes, cosmetics, home and
kids. We continue to invest in the business and are seeing the results. There are questions about
fall; however, we are encouraged by the momentum from the first two quarters.
About Belk, Inc.
Charlotte, N.C.-based Belk, Inc. (www.belk.com) is the nations largest privately owned
mainline department store company with 303 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. To connect
Belk, Inc. News Release | Page 2
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with Belk via Facebook, Twitter, blog mobile phone text messages or by email, go to: Belk Get
Connected.
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.
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 may constitute 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.
Forward-looking statements include information concerning possible or assumed future results from
merchandising,
marketing and advertising in our stores and through the Internet, general economic conditions, the
success of our re-branding, our ability to be competitive in the retail industry, our ability to
execute profitability and efficiency strategies, our ability to execute growth strategies,
anticipated benefits from our strategic initiative to strengthen our merchandising and planning
organizations, anticipated benefits from the redesign of our belk.com website and our eCommerce
fulfillment center, the expected benefit of new systems and technology, anticipated benefits from
our acquisitions and the anticipated benefit under our Program Agreement with GE. These forward
looking statements are subject to certain risks and uncertainties that may cause our actual results
to differ significantly from the results we discuss in such forward-looking statements. We believe
that these forward-looking statements are reasonable. However, you should not place undue reliance
on such statements. Any such forward-looking statements are qualified by the following important
risk factors and other risks which may be disclosed from time to time in our filings that could
cause actual results to differ materially from those predicted by the forward-looking statements.
Forward-looking statements relate to the date initially made, and we undertake no obligation to
update them.
Risks and uncertainties that might cause our results to differ from those we project in our
forward-looking statements include, but are not limited to: economic, political and business
conditions, nationally and in our market areas, including rates of economic growth, interest rates,
inflation or deflation, consumer credit availability, levels of consumer debt and bankruptcies, tax
rates and policy, unemployment trends, potential acts of terrorism and threats of such acts and
other matters that influence consumer confidence and spending; the customer response to our
re-branding initiative; 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, including luxury goods retailers, general
merchandise stores, Internet retailers, mail order retailers and off-price and discount stores, in
the areas of price, merchandise mix, quality, style, service, convenience, credit availability and
advertising; our ability to effectively use advertising, marketing and promotional campaigns to
generate high customer traffic in our stores and, to a lesser degree, through on-line sales;
variations in the amount of vendor allowances; our ability to expand our eCommerce business through
our updated and redesigned belk.com website, including our ability to meet the systems challenges
of operating the website consistently and our ability to efficiently operate our eCommerce
fulfillment facility; 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; increases in the price of merchandise, raw materials, fuel and labor or
their reduced availability; the income we receive from, and the timing of receipt of, payments from
GE, the operator of our private label credit card business, which depends upon the amount of
purchases made through the proprietary credit cards, the level of finance charge income
generated from the credit card portfolio, the number of new accounts generated, changes in
customers credit card use, and GEs ability to extend credit to our customers; our ability to
manage our expense structure; our ability to continue to open new stores, or to remodel or expand
existing stores, including the availability of existing retail stores or store sites on acceptable
Belk, Inc. News Release | Page 3
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terms and our ability to successfully execute the Companys retailing concept in new markets
and geographic regions; the efficient and effective operation of our distribution network and
information systems to manage sales, distribution,
merchandise planning and allocation functions; the effectiveness of third parties in managing our
outsourced business; loss of qualified employees or an inability to attract, retain and motivate
additional highly skilled employees; changes in federal, state or local laws and regulations; our
ability to comply with debt covenants, which could adversely affect our capital resources,
financial condition and liquidity; and our ability to realize the planned efficiencies from our
acquisitions and effectively integrate and operate the acquired stores and businesses, including
our fiscal year 2007 acquisition of Parisian stores and our fiscal year 2007 acquisition of the
assets of Migerobe and commencement of our owned fine jewelry business.
Our forward-looking statements are based on current expectations and speak only as of the date of
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.
For a detailed description of the risks and uncertainties that might cause our results to differ
from those we project in our forward-looking statements, we refer you to the section captioned
Risk Factors in our annual report on Form 10-K for the fiscal year ended January 29, 2011 that we
filed with the SEC on April 12, 2011. Our other filings with the SEC may contain additional
information concerning the risks and uncertainties listed above, and other factors you may wish to
consider. Upon request, we will provide copies of these filings to you free of charge.
BELK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Thirteen Weeks Ended | Twenty-Six Weeks Ended | |||||||||||||||
July 30, | July 31, | July 30, | July 31, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(millions) | ||||||||||||||||
Revenues |
$ | 831.8 | $ | 787.7 | $ | 1,680.4 | $ | 1,591.6 | ||||||||
Cost of goods sold (including occupancy, distribution and buying expenses) |
555.1 | 532.1 | 1,117.5 | 1,068.6 | ||||||||||||
Selling, general and administrative expenses |
228.0 | 225.3 | 457.5 | 443.3 | ||||||||||||
Gain on sale of property and equipment |
0.6 | 1.0 | 1.3 | 1.8 | ||||||||||||
Asset impairment and exit costs |
(0.9 | ) | 1.1 | (0.7 | ) | 1.3 | ||||||||||
Operating income |
50.2 | 30.2 | 107.4 | 80.2 | ||||||||||||
Interest expense, net |
(12.4 | ) | (12.6 | ) | (24.9 | ) | (25.5 | ) | ||||||||
Income before income taxes |
37.8 | 17.6 | 82.5 | 54.7 | ||||||||||||
Income tax expense |
12.8 | 5.2 | 25.6 | 17.9 | ||||||||||||
Net income |
$ | 25.0 | $ | 12.4 | $ | 56.9 | $ | 36.8 | ||||||||
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 | Twenty-Six Weeks Ended | |||||||||||||||
July 30, | July 31, | July 30, | July 31, | |||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(millions) | ||||||||||||||||
Net income |
$ | 25.0 | $ | 12.4 | $ | 56.9 | $ | 36.8 | ||||||||
Gain on sale of property and equipment, net of income tax |
(0.4 | ) | (0.7 | ) | (0.9 | ) | (1.2 | ) | ||||||||
Asset impairment and exit costs, net of income tax |
(0.6 | ) | 0.7 | (0.5 | ) | 0.9 | ||||||||||
Net income excluding non-comparable items |
$ | 24.0 | $ | 12.4 | $ | 55.5 | $ | 36.5 | ||||||||