Belk's Fall Rebranding Effort Pays Off in 3Q
Cecile Corral -- Casual Living, February 25, 2011
CHARLOTTE, N.C. - Three times is a charm for Belk Inc., as the regional department store enjoyed its third consecutive earnings period of comp store growth and solid margins in its third quarter.
The 305-unit chain in 16 Southern states reported a 2.6% increase in total sales to $746.6 million, and a 2.5% gain in comps for the 13 weeks, ended Oct. 30.
"We are investing in strategic areas, including branding, IT infrastructure and merchandising headcount, which has raised our costs for the quarter but which we believe will boost performance over the long term," said Tim Belk, chairman and ceo. "We are encouraged by our profitability to date and are positive about the remainder of the year."
The top performing merchandise categories included home furnishings as well as shoes, men's apparel and children's apparel.
Less lustrous news came in the $4.2 million net loss for the third quarter compared to net income of $0.4 million for the yearago period. The company said 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 company's 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.
Belk's year-to-date sales totaled $2,338.2 million, an increase of 4.0%, compared with last year, and comps rose by 4.4%.
Net income for the first 39 weeks was $32.6 million compared to $10.4 million. Excluding non-comparable items, net income was $30.5 million compared to $11.8 million.
Ushering Belk's growth in the quarter was its 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.
Belk added that its 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 Belk's new graphic elements and brand messages."