Saks Fifth Avenue 2009 Annual Report Download - page 11

Table of Contents
number of financial institutions and have affected the cost of capital available to the Company. The Company cannot predict with any certainty the impact of any
further disruption in the credit environment or any resulting material impact on its liquidity, future financing costs or financial results.
The Company is dependent on its relationships with certain designers, vendors, and other sources of merchandise.
The Company’s relationships with established and emerging designers are a key factor in its position as a retailer of luxury merchandise, and a substantial
portion of its revenues are attributable to its sales of designer merchandise. Many of the Company’s key vendors limit the number of retail outlets they use to sell
their merchandise, and competition among luxury retailers to obtain and sell these goods is intense. The Company’s relationships with its designers have been a
significant contributor to its past success. Although the Company has supply arrangements with some of its merchandising sources, there can be no assurance that
such sources will continue to meet the Company’s quality, style, and volume requirements. Moreover, nearly all of the top designer brands sold by the Company
are also sold by competing retailers, and many of these top designer brands also have their own dedicated retail stores. If one or more of these top designers were
to cease providing the Company with adequate supplies of merchandise or, conversely, were to increase sales of merchandise through its own stores or to the
stores of other competitors, the Company’s business could be adversely affected. In addition, any decline in the popularity or quality of any of these designer
brands could adversely affect the Company’s business.
The Company’s business and results of operations may be adversely affected by weather conditions and natural disasters.
The Company’s business is adversely affected by unseasonable weather conditions. Periods of unseasonably warm weather in the fall or winter or
unseasonably cold or wet weather in the spring or summer affect consumer apparel purchases and could have a material adverse effect on the Company’s results
of operations and financial condition. Additionally, severe weather conditions such as winter snowstorms or natural disasters such as hurricanes, tornadoes,
earthquakes, and floods may adversely affect the Company’s results of operations and financial condition.
The Company’s business is intensely competitive and increased or new competition could have a material adverse effect on the Company.
The retail industry is intensely competitive. As a retailer offering a broad selection of luxury fashion apparel, shoes, accessories, jewelry, cosmetics, and
gift items, the Company currently competes with a diverse group of retailers, including e-commerce retailers, which sell, among other products, products similar
to those of the Company. The Company also competes in particular markets with a substantial number of retailers that specialize in one or more types of products
that the Company sells. A number of different competitive factors could have a material adverse effect on the Company’s business, results of operations and
financial condition including:
• increased operational efficiencies of competitors;
• competitive pricing strategies, including deep discount pricing by a broad range of retailers during periods of poor consumer confidence or economic
instability;
• expansion of product offerings by existing competitors;
• entry by new competitors into markets in which the Company currently operates; and
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Source: SAKS INC, 10-K, March 18, 2010 Powered by Morningstar® Document Research℠