QUOTE AND NEWS
The Economic Times  Feb 27  Comment 
The entire pool qualifies for Priority Sector treatment as per the Reserve Bank of India's Priority Sector lending guidelines, it added
The Economic Times  Feb 27  Comment 
The top 10 MFIs control 80 per cent of the market -- led by Bandhan -- which saw 59 per cent surge in disbursements, followed by SKS Microfinance.
The Economic Times  Feb 19  Comment 
Third sector could be the NBFCs mainly because of the smart cities concept wherein NBFCs will have to play a role.
The Economic Times  Feb 18  Comment 
SKS Microfinance Ltd is a ‘SELL’ call with a target of Rs 410 and a stop loss of Rs 435.
The Hindu Business Line  Feb 5  Comment 
SKS Microfinance Ltd has completed the fourth securitisation transaction in current financial year worth Rs 83.32 crore. With this, the total sum of securitisations completed duri...
The Hindu Business Line  Jan 29  Comment 
SKS Microfinance Ltd will be applying to the Reserve Bank of India for a small finance bank licence.   The board of the directors of the company had approved a proposal in t...
New York Times  Jan 16  Comment 
New York’s attorney general takes issue with statements Saks lawyers made regarding a Houston-based employee’s treatment and dismissal.
New York Times  Jan 14  Comment 
The chief executive of Saks Fifth Avenue’s parent company denied accusations made by a former employee that she was harassed, then dismissed, over her transgender identity.
BusinessWeek  Jan 9  Comment 
The White House, the EEOC, and several courts all say transgender workers are protected—but that's not as good as a law
The Hindu Business Line  Jan 7  Comment 
‘Planet SKS’, a high-rise building in Mangaluru, has been awarded the ‘Best residential project in tier-II city under the ultra luxury segment’ by CNBC Awaz, according to Sanath Kumar Shet...




 


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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