Saks Fifth Avenue 2009 Annual Report Download - page 13

Download and view the complete annual report

Please find page 13 of the 2009 Saks Fifth Avenue annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 142

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142

Table of Contents
Additionally, freight cost is impacted by changes in fuel prices. Fuel prices affect freight cost both on inbound freight from vendors to the distribution
centers and outbound freight from the distribution centers to the Company’s stores.
Although the Company maintains business interruption and property insurance, management cannot be assured that the Company’s insurance coverage
will be sufficient, or that insurance proceeds will be timely paid to the Company, if any of the distribution centers are shut down for any reason.
Loss of the Company’s trademarks and service marks or damage to the Company’s brand could have a material adverse effect on the Company’s results
of operations.
The Company owns many trademarks and service marks including, but not limited to, “Saks Fifth Avenue,” “Saks & Company,” “SFA,” “S5A,” “The
5TH Avenue Club,” “SAKSFIRST,” “Clothes (Real),” “Saks Fifth Avenue Men’s Collection,” and “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 with the United States Patent and Trademark Office. In addition, the Company
has a well-recognized brand that it believes represents unsurpassed customer service and quality merchandise. Any significant damage to the Company’s brand
or reputation may negatively impact same-store sales, lower employee morale and productivity, and diminish customer trust, resulting in a reduction in
shareholder value.
Fluctuations in foreign currency could have an adverse impact on the Company’s business.
The Company purchases a substantial portion of its inventory from foreign suppliers whose functional currency is not the U.S. dollar. Although
fluctuations in the Euro-U.S. dollar exchange rate have the largest impact on the Company’s business, the Company procures goods from many countries and,
consequently, is affected by fluctuations in the U.S. dollar relative to the currencies of the countries from which the Company purchases goods. Accordingly,
changes in the value of the dollar relative to foreign currencies may increase the Company’s cost of goods sold. If the Company is unable to pass such cost
increases on to its customers or the higher cost of the products results in decreased consumption, gross margins and ultimately earnings would decrease.
If the Company does not successfully upgrade, maintain and secure our information systems to support the needs of the organization, it could have an
adverse impact on the Company’s business.
The Company relies heavily on information systems to manage operations, including a full range of retail, financial, sourcing and merchandising systems,
and regularly make investments to upgrade, enhance or replace these systems. The reliability and capacity of information systems is critical. Despite our
preventative efforts, the Company’s systems are vulnerable from time to time to damage or interruption from, among other things, security breaches, computer
viruses, power outages and other technical malfunctions. Any disruptions affecting the Company’s information systems, or any delays or difficulties in
transitioning to new systems or in integrating them with current systems, could have a material adverse impact on our business. In addition, the Company’s
ability to continue to operate its business without significant interruption in the event of a disaster or other disruption depends in part on the ability of the
Company’s information systems to operate in accordance with our disaster recovery and business continuity plans.
A privacy breach could adversely affect the Company’s business.
The protection of customer, employee, and company data is critical to the Company. The regulatory environment and industry standards surrounding
information security and privacy continue to evolve in response
11
Source: SAKS INC, 10-K, March 18, 2010 Powered by Morningstar® Document Research℠