Belk Q1 Net Drops 31.6 Percent
CHARLOTTE, N.C.-With a difficult sales environment and the company pumping more money into strategic initiatives, Belk's first-quarter net income fell 31.6 percent to $19.3 million.
Net sales for the quarter, which ended on May 3, were essentially flat at $955.1 million, including a same-store sales decrease of 0.2 percent. Tim Belk, chairman and CEO, said the soft economy and comparisons with large increases in last year's first quarter made the business challenging for the retailer. Belk added that the company's online business continued to grow, posting a 42.4 percent gain in the period.
Selling, general and administrative expenses were up 4.7 percent dollars and 127 basis points as a percentage of sales, to 28 percent. The expense increases reflected the investments Belk is making in its omnichannel initiative, the opening of new stores and remodeling of existing ones, supply-chain efforts, information technology and customer service. Gross margin declined by 15 basis points to 32.4 percent.
Along with the robust online performance, the quarter saw the opening of Belk's first Texas flagship store, in Dallas, and the launch of its new private label for home, CYNTHIA Cynthia Rowley, consisting of fine linens, bedding, tabletop, decorative pillows and other home decor items. The second quarter will bring, among other store openings and remodels, the opening of a flagship store in Huntsville, Ala., and flagship expansions and remodels scheduled to be completed later this year include Greenville, N.C., Mount Pleasant, S.C. and Hoover, Ala.
Belk said, "Although the investments we are making in the company will continue to impact our short-term profitability, we are building a solid foundation for long-term growth and success."