Saks Fifth Avenue 2009 Annual Report Download - page 10

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Table of Contents
• the performance of the financial equity, and credit markets;
• current and expected unemployment levels;
• crude oil prices that affect gasoline and heating oil prices;
• the level of consumer debt;
• the level of consumer savings
• interest rates;
• tax rates and policies;
• consumer confidence in future economic conditions; and
• war, terrorism, and other hostilities.
Reduced consumer confidence and spending has resulted in reduced demand for discretionary items and has forced the Company to take significant
markdowns in the past. If consumer demand for the Company’s merchandise remains weak, the Company may be forced to take additional markdowns in future
periods.
Additionally, several of the Company’s stores are in tourist markets, including the flagship SFA New York store. A continuation of the downturn in
economic conditions or other events such as terrorist activity could further impact travel and thus negatively affect the results of operations for stores located
within these tourist markets. Increases in transportation and fuel costs, the financial condition of the airline industry and its impact on air travel, and sustained
recessionary periods in the U.S. and internationally could also unfavorably impact results of the stores located within these tourist markets.
The Company’s business and results of operations are also subject to uncertainties arising out of world events. These uncertainties may include a global
economic slowdown, changes in consumer spending or travel, an increase in gasoline and commodity prices, epidemics, and the economic consequences of
natural disasters, military action or terrorist activity (including threats of terrorist activity). Any future events arising as a result of terrorist activity, natural
disasters or other world events may have a material impact on the Company’s business, its ability to source products, results of operations, and financial
condition in the future.
The Company’s flagship SFA New York store is especially susceptible to volatility in the financial markets and employment and compensation trends in
the financial sector.
The Company is restricted in its ability to incur additional debt which may affect its ability to adequately finance its operations.
Our revolving credit facility, our senior notes, and our 2.0% convertible notes contain restrictions on liens and sale/leaseback transactions, and our
revolving credit facility also contains a restriction on additional indebtedness, in each case, subject to certain limited exceptions. These restrictions under the
revolving credit agreement and the outstanding notes may affect the Company’s ability to obtain additional debt financing or financing on favorable terms if its
cash flow from operations and funds available under its revolving credit facility are insufficient to satisfy its working capital requirements.
We are unable to predict the impact of potential disruptions in the credit markets and the resulting costs or constraints in obtaining financing on our
business and financial results.
The Company’s principal sources of cash come from the Company’s operating activities and borrowings under its revolving credit facility. Disruptions in
the credit markets have had a significant adverse impact on a
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Source: SAKS INC, 10-K, March 18, 2010 Powered by Morningstar® Document Research℠