QUOTE AND NEWS
The Economic Times  8 hrs ago  Comment 
Buy SKS Microfinance with a target of Rs 725 and a stop loss of Rs 641
The Economic Times  May 11  Comment 
For FY17, SKS has set a target disbursements of Rs16,500 crore and gross loan book of Rs11,000 crore which translates into a growth of 37 per cent and 43 per cent, respectively.
The Hindu Business Line  May 5  Comment 
Broadening of borrowers’ base, cross-selling of products paid off in boosting earnings: president Dilli Raj
The Hindu Business Line  May 5  Comment 
The Economic Times  May 5  Comment 
Sell SKS Microfinance May future with a target of Rs 559 and a stop loss of Rs 613
The Hindu Business Line  May 4  Comment 
SKS Microfinance’s standalone net profit more than doubled to ₹84.46 crore in the fourth quarter ended March 31, 2016, compared with ₹40.53 crore in the corresponding quarter of the previous financia...
The Economic Times  May 3  Comment 
The stock has returned 14.99 per cent in the past one month against a 13 per cent rise in Manappuram Finance and 6 per cent rise in Muthoot Finance.
The Hindu Business Line  May 1  Comment 
SKS Microfinance (₹604) appears poised for a decent rally in the medium term. The stock finds immediate resistance at ₹658 and a close above this can take it to ₹740. However, only a close above ₹1,...
The Economic Times  Apr 22  Comment 
Securitisation is a process of pooling various types of loan receivables and selling their related cash flows to third party investors as securities.
The Economic Times  Apr 21  Comment 
Unlike SKS which is a pure play micro-finance company Equitas has a diversified portfolio which includes vehicle financing, MSME financing and home loans.
TechCrunch  Apr 14  Comment 
 Alexis Maybank, one of the founders of Gilt Groupe (recently acquired by the owner of Saks Fifth Avenue), has a new startup in the world of fashion and shopping — Project September. Maybank told me her aim is to “make the visual world...




 


Saks Incorporated (NYSE:SKS) sells luxury apparel, shoes, jewelry and accessories in the U.S. through its Saks Fifth Avenue (SFA), Saks Fifth Avenue Off Fifth and Club Libby Lu (CLL) stores. In fiscal 2010, SKS posted net sales of $2.786 billion and net income of $47.85 million.[1]

Saks—and most other luxury goods retailers—are relatively shielded from trends such as rising oil prices because it targets a lower-income demographic; however, luxury consumption exaggerates more fundamental up and down swings, typically rising and declining at a faster rate than the overall economy. Due to healthier U.S. economic conditions, Saks made profits in fiscal 2010, compared to losses suffered in 2008 and 2009.[1]


Company Overview

Saks owns and operates luxury retail stores, selling high-end fashion apparel, accessories and furnishings to its traditionally middle-aged, higher-income female customers.

Business Segments

The Saks, OFF 5TH and Saks Direct businesses are aggregated in one business segment.[1] SKS product categories are listed below:

  • Women's Apparel: 37.5% of Fiscal 2010 net sales.[1]
  • Accessories: 18.9%
  • Cosmetics: 12.1%
  • Men's Apparel: 15.2%
  • Women's Shoes: 12.8%
  • Other: 3.3%

Geographic Presence

Most of Saks stores are in the U.S., but the company does have SFA stores in Riyadh, Saudi Arabia; Dubai, United Arab Emirates, Mexico City, Mexico, Kazakhstan, and Shanghai, China.[1]

Business Growth

Fiscal 2010 (ended January 29th, 2011)

As a whole, SKS had a rebounding fiscal 2010 compared to their net losses in 2008 and 2009.

  • Net sales increased 5.9% to $2.786 billion.[1]
  • SKS posted net income of $47.85 million, compared with a $57.9 million loss in fiscal 2009.[1]

Trends and Forces

Luxury retail exaggerates swings in economic cycles

While luxury goods consumption is well-insulated from trends such as rising oil prices, the industry is sensitive to longer-term changes in economic cycles, as luxury goods exaggerate up and down swings. During a boom, consumers' demand tends to increase faster than the growth rate of economies while slowdowns can lead to rapid declines in sales. Reduced demand for luxury items might induce the company to take inventory markdowns or offer discounted items, which detract from the cache of expensive items.

Tourism drives 20% of sales

A substantial number of Saks’ department stores are actually not in tourist markets, including the flagship SFA store on Fifth Avenue in New York City, and approximately 2.43% of the company’s annual sales come from tourists. Global instability, such as terrorist activity would discourage tourism. Furthermore, many tourists take advantage of the U.S dollar’s weakness in relation to other currencies when buying from Saks; a strengthening of the dollar may discourage tourist business for the company. While most of its stores are in the U.S., the company does have SFA stores in Riyadh, Saudi Arabia, Dubai, United Arab Emirates, but not Mexico.

High dependence on fashion trends

Much of success in the retail business depends on the company’s ability to predict and anticipate consumer tendencies as order agreements are made months in advance of sales to consumers. Consequently, if the company inaccurately predicts consumer preferences, it could face lower sales, an overflow in inventories and lower profit margins—all of which would adversely affect the company’s financial health.

Competition

The luxury retail market has become increasingly competitive, and Saks’ prime competitors include Neiman Marcus (privately held), Nordstrom (JWN), Bloomingdale’s, and Barney’s (privately held), all of which offer comparable merchandise and cater to a customer demographic that earns roughly $175,000 to $200,000 a year, though Nordstrom targets a slightly less affluent average customer.

  • Saks (SKS) merchandise is dominated by apparel, which constitutes about 55% of the total assortment
  • Nordstrom (JWN) derives a sizeable portion of sales from shoes
  • Bloomingdale’s derives a high portion of its revenue from home goods.

References

  1. 1.0 1.1 1.2 1.3 1.4 1.5 1.6 SKS 2010 10-k
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