Saks shares down as analyst forecasts wider loss

ATLANTA, Jan 5 - Shares of Saks Inc were down 14 percent on Monday after an analyst forecast a wider loss for the luxury retailer for 2008.

Barclays Capital cut its 2008 per-share earnings estimate on Saks to a loss of 50 cents a share from a loss of 45 cents a share.

While holiday sales likely were above expectations, "we believe that significant promotional activity more than offset the sales benefit," Barclays analyst Robert Drbul said in a research note.

Barclays said it expected a decrease of 8 percent in sales at stores open at least a year for Saks's fourth quarter, compared with a prior estimate of a 17 percent drop in same-store sales, as promotional activity helped clear inventory. But that inventory clearance likely came at the expense of margins, Drbul's note added.

The operator of Saks Fifth Avenue stores has seen sales drop since the financial markets crisis prompted its shoppers to seek out bargains rather than pay full price.

"While we believe that Saks maintains a strong franchise and should realize the benefits from its productivity and profitability initiatives longer term, we expect continued soft (same-store) sales results into 2009," Drbul wrote.

"We expect the results at Saks to be pressured by soft demand, weak traffic, suboptimal inventory levels and a heavily promotional environment," he added.

Saks shares were down 71 cents at $4.34 in early afternoon New York Stock Exchange trading.