QUOTE AND NEWS
The Economic Times  Jul 7  Comment 
​​According to a senior official, Jindal India Thermal Power, Avantha Group’s Jhabua Power and SKS Power were the other three that matched the lowest price.
Reuters  Jun 25  Comment 
Saks Fifth Avenue owner Hudson's Bay Co is in discussions with Austrian property and retail group Signa Holding GmbH about a joint venture for its German retail chain Kaufhof, two people familiar with the matter said on Monday.
Forbes  Jun 24  Comment 
Amazon has started to leverage machines to make critical inventory decisions. While, Amazon's strategy has been to develop technologies internally and Walmart’s is to acquire technologies, how can the rest of retailers and brands keep pace?
The Economic Times  May 25  Comment 
According to Akula, during his days in SKS, MR Rao was tracking Akula’s phone calls.
Clusterstock  Apr 3  Comment 
This story was delivered to BI Intelligence "Payments Briefing" subscribers hours before appearing on Business Insider. To be the first to know, please click here. Department stores Saks Fifth Avenue, Saks Off 5th, and Lord & Taylor — all of...
Bankstocks.com  Apr 3  Comment 
L.A. Times: Consumer protection bureau’s chief formally asks Congress to slash his agency’s power Wall Street Journal: Oil Prices Regain Footing After Selloff Bloomberg: Savers Rejoice:…
Channel News Asia  Apr 2  Comment 
Hudson's Bay shares dropped on Monday after the Canadian department store operator reported security breaches at some of its Saks Fifth Avenue, Saks OFF 5th and Lord & Taylor stores on Sunday.
CNNMoney.com  Apr 1  Comment 
Hackers stole information for more than 5 million credit and debit cards used at Saks Fifth Avenue, Saks Off 5th and Lord & Taylor stores.
Motley Fool  Mar 31  Comment 
Weak fourth-quarter results provide yet another indication that the company must take drastic action to fix the underperforming parts of its business.




 


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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