QUOTE AND NEWS
The Economic Times  Feb 5  Comment 
In a chat with ET Now, Mitesh Thacker, Technical Analyst, miteshthacker.com, calls buy on SKS Micro with Rs 575 as target
The Economic Times  Feb 4  Comment 
"SKS Microfinance is a ‘BUY’ call with a target of Rs 575 and a stop loss of Rs 532."
The Economic Times  Jan 28  Comment 
The S&P BSE Sensex starts on a cautious note in morning trade on Thursday but with a positive bias, led by gains in ITC, ICIC Bank, RIL.
The Economic Times  Jan 27  Comment 
SKS Microfinance today reported nearly twofold increase in net profit at Rs 79,4 crore for the third quarter ended December 31.
TechCrunch  Jan 7  Comment 
 Hudson’s Bay Company, the owner of department chain stores like Saks Fifth Avenue, said today it was acquiring Gilt Groupe for $250 million. The sale still represents a tough end to the story of Gilt. The startup was one of the original...
New York Times  Jan 7  Comment 
The online fashion retailer, once seen as revolutionary, is sold for $250 million in cash.
The Hindu Business Line  Dec 31  Comment 
Motilal OswalSKS Micro (Buy)CMP: ₹498.95Target: ₹589Recent regulatory development bodes well for the largest incumbent SKS Microfinance (SKSM). RBI doubled ticket...
The Economic Times  Dec 31  Comment 
In terms of being aware of the SEBI’s guideline, SKS Microfinance is certainly one of our top holding in the midcap space.
The Economic Times  Dec 30  Comment 
Motilal Oswal has initiated coverage on SKS Microfinance (SKSM) with a buy rating and target price of Rs 589.
MarketWatch  Dec 18  Comment 
Saks Fifth Avenue, the luxury retailer that's part of Hudson's Bay Co. , said it will open a men's department store in downtown New York City in spring 2017, the third Saks Fifth Avenue store in the city since the retailer launched in 1924. The...




 


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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