QUOTE AND NEWS
The Economic Times  May 15  Comment 
SKS Microfinance is a 'BUY' call with a target of Rs 850 and a stop loss of Rs 827.
The Economic Times  May 7  Comment 
The reaction came after Morgan Stanley Asia sold 692,680 shares in a block deal on Wednesday at 458.65 rupees a share, as per NSE.
The Hindu Business Line  May 6  Comment 
Growth momentum could continue as economy revives, say analysts
The Economic Times  May 5  Comment 
After surging 7.15 per cent to Rs 496.75 in intra-day trade, shares of SKS Microfinance finally ended at Rs 481.60, up 3.88 per cent on the BSE.
The Economic Times  May 5  Comment 
SKS Microfinance surged over 7% in trade, a day after the microfinance lender registered over 49 per cent rise in its net profit.
The Hindu Business Line  May 4  Comment 
SKS Microfinance Ltd’s net profit increased 48 per cent at Rs 40 crore in the fourth quarter ended March 31, 2015 compared to Rs 27 crore in the corresponding quarter of previous financial year.
The Economic Times  Apr 15  Comment 
This will still be lower than the SKS Microfinance IPO in 2010 that raised Rs 1,654 crore.
The Economic Times  Apr 8  Comment 
SKS Microfinance Ltd continued its rally for second straight day and gained as much as 2.15 per cent in intraday trade on Wednesday.
Wall Street Journal  Apr 7  Comment 
Hudson’s Bay on Tuesday posted fourth-quarter sales growth of more than 9%, helped in part by a big jump in digital sales and stronger same-store sales across its banners.
The Economic Times  Apr 7  Comment 
Considering the valuation versus the RoE, and the growth potential, microfinance stocks need to be treated as expensive growth stocks, says Sekhar.




 


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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