Saks Fifth Avenue 2008 Annual Report Download - page 7

The Company seeks to expand the number and use of the proprietary credit cards by, among other things,
providing monetary incentives to sales associates to open new credit accounts, which generally can be opened
while a customer is visiting one of the Company’s stores. Customers who open accounts are entitled to a discount
on the first day’s purchases. Customers using the proprietary credit card are eligible for the SaksFirst loyalty
program that rewards customers for spending on their proprietary charge cards. Additionally, co-brand card
customers earn SaksFirst points for purchases made at unaffiliated locations. Increased spending on the
proprietary cards is intended to result in an increased rate of reward. Rewards come in the form of electronic gift
cards that are redeemable on future purchases. In addition, members of the loyalty program are eligible for other
rewards and benefits including special shopping events and travel discounts.
As of January 31, 2009, there were approximately 800,000 proprietary credit accounts that have been active
within the prior twelve months, accounting for approximately 44.1% of the Company’s 2008 sales.
Trademarks and Service Marks
The Company owns many trademarks and service marks including, but not limited to, “Saks Fifth Avenue,”
“SFA,” “S5A,” “The Fifth Avenue Club,” “SAKSFIRST,” “Clothes (Real),” “SFA Signature,” “SFA Classic,”
“SFA Sport,” and “Saks Fifth Avenue OFF 5TH.” Management believes its trademarks and service marks are
important and that the loss of certain of its trademarks or trade names, particularly the store nameplates, could
have a material adverse effect on the Company. Many of the Company’s trademarks and service marks are
registered in the United States Patent and Trademark Office. The terms of these registrations are generally ten
years, and they are renewable for additional ten-year periods indefinitely so long as the marks are in use at the
time of renewal. The Company is not aware of any claims of infringement or other challenges to its right to use
its marks that would have a material adverse effect on the Company’s consolidated financial position, results of
operations, or liquidity.
Reliance on Fifth Avenue Store
The Company’s Flagship SFA store located on Fifth Avenue in New York City accounted for approximately
21% of total Company sales in 2008 and plays a significant role in creating awareness for the Saks Fifth Avenue
brand name.
Customer Service
The Company believes that good customer service contributes to increased store visits and purchases by its
customers.
The Company’s goal is to deliver an inviting, customer-focused shopping experience to each customer. At
SFA and OFF 5TH, the Company seeks to enable its customers to discover both accessible and high-end fashion
in a warm, welcoming environment, guided by knowledgeable sales associates. Compensation for sales
associates is generally a commission-based program. Sales associates undergo extensive service, selling, and
product-knowledge training and are encouraged to maintain frequent, personal contact with their customers.
Sales associates are encouraged to utilize detailed customer data available through the Company’s new
point-of-sale equipment and software for their clienteling efforts, send personalized thank-you notes and
routinely communicate with customers to advise them of new merchandise offerings and special promotions.
Typical SFA stores also provide comfortable seating areas, and most SFA stores offer a complimentary personal
shopping service called “The Fifth Avenue Club.”
Seasonality
The Company’s business, like that of many retailers, is subject to seasonal influences, with a significant
portion of its sales and net income realized during the second half of the fiscal year, which includes the holiday
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