Saks Fifth Avenue 2008 Annual Report Download - page 22

The disposition included Parisian’s operations consisting of, among other things, the following: real and
personal property, operating leases and inventory associated with 38 Parisian stores, an administrative/
headquarters facility in Birmingham, Alabama and a distribution center located in Steele, Alabama. The
Company realized a net loss of $12.8 million on the sale.
In connection with the consummation of the Parisian transaction, the Company entered into a Transition
Services Agreement with Belk (“Parisian TSA”). Pursuant to the Parisian TSA, the Company provided, for
varying transition periods, back-office services related to the Company’s former Parisian specialty department
store business. The back-office services included information technology, telecommunications, credit, accounting
and store planning services, among others. The results of the Parisian operations are reflected as discontinued
operations in the accompanying consolidated statements of income and the consolidated statements of cash flows
for fiscal year 2006.
As of January 31, 2009, the Company discontinued the operations of its CLL business, which consisted of
98 leased, mall-based specialty stores, targeting girls aged 4-12 years old. Charges incurred during 2008
associated with the closing of the stores included inventory liquidation costs of approximately $7.0 million, asset
impairment charges of $17.0 million, lease termination costs of $14.0 million, severance and personnel related
costs of $5.1 million and other closing costs of $1.4 million. The amount payable relating to the disposition of the
CLL business as of January 31, 2009 is $13.6 million and is expected to be paid during the year ending
January 30, 2010. These amounts and the results of operations of CLL are included in discontinued operations in
the consolidated statements of income for fiscal year 2008.
SAKS FIFTH AVENUE NEW ORLEANS STORE
In late August 2005, the SFA store in New Orleans suffered substantial water, fire, and other damage related
to Hurricane Katrina. The Company reopened the store in the fourth fiscal quarter of 2006 after necessary repairs
and renovations were made to the property.
The SFA New Orleans store was covered by both property damage and business interruption insurance. The
property damage coverage paid to repair and/or replace the physical property damage and inventory loss, and the
business interruption coverage reimbursed the Company for lost profits as well as continuing expenses related to
loss mitigation, recovery, and reconstruction for the full duration of the reconstruction period plus three months.
The Company recorded in 2005 both (i) a $14.7 million gain on the excess of the replacement insurance value
over the recorded net book value of the lost and damaged assets and (ii) $2.6 million of expenses related to the
insurance deductible. In 2006, the Company recorded an adjustment (credit) of $1.6 million related to the
insurance deductible. In 2007, the Company recorded a pre-tax gain of $13.5 million associated with the
proceeds from the business interruption claims.
FINANCIAL PERFORMANCE SUMMARY
On a consolidated basis, total net sales and comparable store sales for the year ended January 31, 2009
decreased 6.0% and 6.1%, respectively. The Company recorded a loss from continuing operations of $122.8
million, or $0.89 per share compared to income from continuing operations of $50.7 million, or $0.33 per share,
for the years ended January 31, 2009 and February 2, 2008, respectively. After recognition of the Company’s
after-tax loss from discontinued operations of $32.2 million, or $0.23 per share, net loss totaled $154.9 million,
or $1.12 per share for the year ended January 31, 2009. After recognition of the Company’s after-tax loss from
discontinued operations of $3.2 million, or $0.02 per share, net income totaled $47.5 million, or $0.31 per share
for the year ended February 2, 2008.
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