Upscale department store operator Saks Inc reported a quarterly profit on Tuesday, beating Wall Street expectations for a loss, and its shares rose nearly 8 percent.

Saks said it kept a tight rein on inventories and expenses to manage further declines in demand for luxury goods. It also said sales at the flagship Saks Fifth Avenue Store in New York City had shown meaningful improvement during the quarter and reported improved trends for categories such as women's designer sportswear and jewelry.

As we look to next year, we remain cautious about the environment and are planning accordingly. We continue to focus on what we can control- inventory, expenses and capital spending, Saks Chief Executive Stephen Sadove said in a statement.

Saks posted a net profit of $1.9 million, or 1 cent a share in the third quarter ended Oct. 31, from a loss of $43.7 million, or 32 cents a share, a year earlier. Analysts had forecast a loss per share of 11 cents, according to Thomson Reuters I/B/E/S.

Saks, which sells luxury brands such as Marc Jacobs, Versace and Oscar de la Renta, reported overall sales fell 8.5 percent to $631.4 million in the third quarter. It said same store sales were down 10.1 percent during the quarter.

The New York-based retailer's effort to control inventory and costs helped send its gross margin rate up to 40.3 percent from 35.7 percent a year earlier.

Despite the results, Sadove said the company did not plan to open any new Saks Fifth Avenue stores in 2010 or make any major renovations to its stores.

Saks said last week that same store sales in October had risen 0.7 percent.

Consolidated inventories as of Oct. 31 were down 21.4 percent to $799.1 million compared to a year earlier.

Saks said it estimated fourth-quarter sales would be down in the high single digits, news that may have buoyed investors eager to see whether the worst was over after a year of double-digit declines in luxury sales.

Last week, upscale department store Nordstrom Inc reported third-quarter profit that missed expectations, raising doubts about its holiday season performance. [ID:nN11382547]

Separately, Dillard's Inc and TJX Cos Inc reported results on Tuesday, with Dillard's posting a profit and TJX beating Wall Street expectations. 

(Reporting by Phil Wahba, editing by Dave Zimmerman)