Saks Cancels Plans to Spin Off Upscale Unit

Not all the stock offering news was good. Saks Inc. (SKS) said it canceled plans to spin off its upscale Saks Fifth Avenue business from the rest of its department store operations because investors seem less willing to pay a large premium for shares in a luxury retailer.

The gap between the value investors place on luxury merchants and mid-price department stores has narrowed since the company’s July announcement to split the two businesses, Saks Chairman and Chief Executive R. Brad Martin said in a statement.

The company also said it had fiscal fourth-quarter profit of $104 million before charges, or 73 cents a share, matching the average estimate of analysts polled by First Call/Thomson Financial. Total sales in the period ended Saturday rose 4% from the year-ago quarter to $2.19 billion, the company said.

Birmingham, Ala.-based Saks said it still plans to run the two department-store divisions separately, with a central corporate group.

Saks shares, which have risen 11% in the last year, fell 15 cents to $13.60 on the New York Stock Exchange. The cancellation of the spinoff was announced after the close of regular trading.