QUOTE AND NEWS
DailyFinance  Apr 17  Comment 
Filed under: Finance, Personal Finance, Consumer News Wealthy shoppers have become bargain hunters, and that's hurting retailers like Neiman Marcus, Nordstrom, and Saks. Read more...   Permalink | Email this | Linking Blogs | Comments
TechCrunch  Apr 17  Comment 
 One iPhone case is much like the other unless it’s made of figured walnut wood from a retired woodworker in California and feels like the surface of a finely-sanded and well-made piece of antique cabinetry. That’s why Kerf Cases, a...
DailyFinance  Mar 27  Comment 
Filed under: Shop, Fashion, News and Trends Attention shopaholics!:The Saks Fifth Avenue Friends & Family sale is happening right now! From March 20 to April 2nd , get 25% off luxury styles. You might be looking for the perfect pair of flats...
DailyFinance  Mar 20  Comment 
Filed under: Lifestyle, Living, Events What's more dreamy than a breezy, gorgeous home by the sea? Read more...   Permalink | Email this | Linking Blogs | Comments
New York Times  Mar 14  Comment 
A deal would put the struggling high-end retailer under the same umbrella as Saks Fifth Avenue and Lord & Taylor and highlight wider troubles at department stores.
Wall Street Journal  Mar 14  Comment 
Reuters  Mar 3  Comment 
Canada's Hudson's Bay Co , owner of the Lord & Taylor and Saks Fifth Avenue retail chains, has yet to line up equity financing for a bid for Macy's Inc , over a month after approaching its U.S. peer, people familiar with the matter said.
MarketWatch  Feb 23  Comment 
Saks Fifth Avenue, which is owned by Canada's Hudson's Bay Co. , is opening Thursday a third store New York City, targeting men in the financial district. The Saks Fifth Avenue Men's Store will be at 250 Vesey Street in Manhattan, which was...
The Economic Times  Feb 19  Comment 
Aditya Birla Group is in a late stage of discussions” to lease 100,000 sq ft of space in Worldmark 2, where the first Saks outlet in India will open.
newratings.com  Feb 3  Comment 
WASHINGTON (dpa-AFX) - After moving notably higher in the previous session, shares of Macy's (M) have seen some further upside during trading on Friday. Macy's is currently up by 5.2 percent after reaching its best intraday level in a...




 


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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