Omnichannel efforts pressure profits, boost Belk sales

In what has become a familiar industry tale, the Belk department store chain’s investments in omnichannel drove first quarter sales growth but negatively affected profits.

The 297 unit family owned chain, the subject of recent speculation regarding a potential acquisition, said sales increased 3.1% to $985 million and same store sales increased 3.3% during the company’s first quarter ended May 2. Online sales positively affected comparable store sales by 2.1%, according to the company. The strongest performing merchandise categories were men’s and women’s apparel, especially active wear, across all areas.

“First quarter sales remained strong, continuing the trend we saw in the fourth quarter of fiscal year 2015. E-commerce continues to be our fastest growing business. Although the expenses related to our investments continue to impact earnings, we are beginning to see the benefits from those investments in top line growth and higher margins,” Tim Belk, chairman and CEO of Belk.

Belk has spent $600 million during the past three years to upgrade its store experience, information technology systems that enable the company to offer shoppers an omnichannel experience.

E-commerce investments aside, Belk’s bottom line still grew at a respectable pace. Net income increased 13% to $21.8 million compared to $19.3 million in the prior-year period. Net income excluding non-comparable items totaled $24.6 million compared to $19.4 million in the prior year period.