QUOTE AND NEWS
The Economic Times  Nov 12  Comment 
SKS Microfinance Ltd is a 'BUY' call with a target of Rs 380 and a stop loss of Rs 352.
Forbes  Nov 11  Comment 
For many high-end stateside store chains, Alipay -- Alibaba's third-party digital wallet, seen as a rival for PayPal and Apple Pay -- is the way to reach flush Chinese shoppers, with 300 million users and counting.
TechCrunch  Nov 11  Comment 
 Business app marketplace AppDirect announced today that it has acquired Leftronic, a data visualization startup that launched four years ago. Leftronic allows businesses to build custom dashboards visualizing important data. AppDirect co-CEO...
The Economic Times  Nov 5  Comment 
'SKS Microfinance Ltd is a 'BUY' call with a target of Rs 375 and a stop loss of Rs 340.'
The Economic Times  Nov 4  Comment 
The reasons, according to analysts, could be more mundane but long lasting: good financial performance over the past few quarters.
The Economic Times  Oct 29  Comment 
The dynamics over here also appear to be quite favourable, from the point of view of the textile business as well as the other businesses.
The Economic Times  Oct 28  Comment 
In terms of numbers, the FII count jumped to 91 at the end of September quarter this year from 75 in the preceding three-month period.
The Economic Times  Oct 27  Comment 
SKS Microfinance Ltd is a 'BUY' call with a target of Rs 332 and a stop loss of Rs 316
Canada.com  Oct 23  Comment 
Saks Fifth Avenue customers will be able to savour the taste as well as the look of luxury when the department store chain opens its first locations in Canada
The Hindu Business Line  Oct 22  Comment 
SKS Microfinance Ltd has completed its first securitisation transaction amounting to Rs 316.25 crore in the current fiscal. The entire pool (of loans securitised) qualifies for priority sector tre...




 


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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