Saks Inc (SKS): What Happened?

The week isn’t yet over, but Saks Inc (NYSE:SKS) has posted two-day stock gains that double the returns of the last two years. Up more than 20% this week, the company posted a strong earnings release on Tuesday, sending the stock up over double digits. Then, rumors swirled once more that the luxury department store would be acquired and/or subject to a merger, sending the stock soaring again. Unfortunately, the current price leaves prospective investors with a price tag akin to those on the store’s clothing, but let’s take a closer look to find out just how strong this company is performing.

Who said department stores are bad?
J.C. what? Saks Inc (NYSE:SKS) Fifth Avenue laughs in the face of issues plaguing its lower-income-targeting department store brethren. As it turns out, when a wealthy woman wants to throw down a couple of G’s for a cocktail dress, she isn’t quite ready to buy it on the Internet. At least, that’s what Saks Inc (NYSE:SKS)’s latest earnings would lead you to believe.

For the first quarter ended in early May, Saks Inc (NYSE:SKS) brought in $20 million, or $0.13 per share, in net income. Included in this was a more than $10 million one-time impairment charge due to store closings and a non-cash loss on extinguished debt. Adjusted net income comes in at $0.19 per share, or $30.1 million. This still comes in lower than the prior year’s $32.7 million, though neither investors nor analysts seemed too worried about the drop.

Much more appealing was same-store sales, which soared just under 6% for the quarter, compared to the prior year’s. Even more impressive is that this number comes in light of last year’s 4.8% increase. On a store-by-store level, Saks Inc (NYSE:SKS) appears to be one of the strongest in retail.

Like other retail operations trying to adapt in today’s environment, Saks Inc (NYSE:SKS) is putting a great deal of focus on its omnichannel expansion. Essentially, omnichannel retailing is an attempt to streamline the customer experience across all media — increasingly important with the shift to mobile device shopping. Saks management believes that, though this may cause near-term pressure on profits, the expenses will pay off in the long term with continued sales growth.

As mentioned, earnings were not the only thing to set the buy button on fire for Saks stock.