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Saks reports strong third quarter

US department store group Saks saw like-for-like sales fire ahead 11.4% for the third quarter ended November 3.

The company, which is a bid target for a UK investment consortium led by Baugur, reported net income of $21.6 million (£10.4m) for the quarter but this included after-tax items of $4.3m (£2m).

Saks recorded a net income of $8m (£4m) for the nine months to November 3. The nine month period included after-tax items of $26.6m (£13.3m). However, in the previous year, Saks recorded a loss of $29m (£14m) for the nine months to October 29 2006.

Chairman and chief executive Stephen Sadove said: "We are pleased with the year-over-year improvement in our third quarter operating results which primarily was driven by strong comparable store sales and expense leverage."

He added that Saks was confident about fourth quarter performance but admitted the trading environment was now more challenging.

"Our expectation is that we can generate high single-digit comparable store sales growth in the fourth quarter (on top of last year's fourth quarter comp increase of 9.9%), but that we may experience a modest decline in gross margin rate for the period. We believe our inventories are appropriately positioned as we enter the holiday season; however, it is clear that we are now operating in a more challenging economic and environment," Sadove said.

Baugur will undoubtedly look at the results with interest. Last month the investment firm admitted it was investigating the possibility of a takeover of the US department store group. However any bid is not expected to materialise until early 2008.

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