By JOHN P. McDERMOTT
In its first quarterly financial report since announcing it will be sold, Belk Inc. reported a slight increase in revenue and a sharp decline in profits as expenses climbed.
For the May-July fiscal period, sales edged up 1.2 percent to $917.4 million from a year earlier, “primarily as a result of continued increasing e-commerce sales and execution of the company’s key initiatives,” the Charlotte-based retailer said in a filing with the Securities and Exchange Commission.
“Back to school sales have been encouraging, and we believe we are well positioned for the fall,” CEO Tim Belk said in statement.
The department store operator’s net earnings fell 63 percent to $17.4 million.
A $40 million jump in expenses contributed to the lower profit figure for the quarter. The company said most of the increase was associated with “continued heavy investments” in key strategic initiatives and the planned sale to Sycamore Partners Management. Belk has spent $11.5 million on the $3 billion transaction between Feb. 1 and Aug. 31.
The companies announced the deal last month. It is expected to be completed by the end of the year.
The retailer said in a message to employees that the sale “will ensure Belk’s future in our increasingly competitive and changing industry landscape.”
The company said it does not anticipate any layoffs or store closings as a result of the sale.
Stefan Kaluzny, managing director of New York-based Sycamore Partners, said last month that the buyout firm has “great respect for Belk’s management team and associates, its deeply rooted brand, its footprint of stores and its growing online presence.”
“Belk is exactly the kind of investment we look for: an outstanding brand with a proven success formula and the potential for further growth,” he said.
A majority of Belk shareholders with voting stock are in favor of the sale. The retailer’s board has already approved the deal.
Belk operates about 300 locations in 16 states, mainly in the Southern U.S. Total annual sales are about $4 billion, making it the largest privately held department store chain in the country. The company has four locations in the Charleston region.
Sycamore Partners manages about $3.5 billion and specializes in retail and consumer businesses. Its website shows the firm’s past investments have included Aeropostale, Coldwater Creek, Jones New York, Nine West and Talbots.
Contact John McDermott at 937-5572.