Saks Fifth Avenue 2009 Annual Report Download - page 5

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Table of Contents
For the year ended January 30, 2010, SFA’s percentages of owned sales (exclusive of sales generated by leased departments) by major merchandise
category were as follows:
Women’s Apparel 35.2%
Accessories 19.6%
Cosmetics 16.3%
Men’s Apparel 14.0%
Women’s Shoes 10.3%
Other 4.6%
Total 100.0%
Inventory Purchasing and Distribution
Consistent with practices in the retail industry, the Company purchases merchandise assortments and volumes to coincide with the seasonality of the
business and expected customer demand. Retailers typically purchase and receive larger amounts of merchandise in the fall as they prepare for the holiday
shopping season (primarily November and December).
The Company purchases merchandise from many vendors. Management monitors profitability and sales history with vendors and believes it has
alternative sources available for each category of merchandise it purchases. Management believes it maintains good relationships with its vendors.
The Company has two distribution facilities serving its stores. Refer to “Item 2. Properties” for additional information about these facilities.
The Company’s distribution facilities operate on a modern warehouse management system that leverages electronic data interchange (“EDI”) technology
in conjunction with high-speed automated conveyor systems in order to receive and distribute merchandise as economically as possible to the Company’s stores.
Many of the Company’s vendors also utilize EDI technology which permits merchandise to be ‘cross docked’ from the receiving department to the shipping
department, with very little handling. The distribution centers also use efficient radio frequency hand-held devices to scan barcodes on merchandise that is too
large or fragile for the conveyor system. The warehouse management system is interfaced to the Company’s mainframe to execute ‘booking’ of the merchandise
to the stores and to pass the appropriate records to accounting for invoice payment and reconciliation.
Return Policy
The Company offers its customers a fair and liberal return policy, consistent with other luxury retailers, at SFA stores, OFF 5TH stores, and online at
www.saks.com. Approximately 23% of merchandise sold is later returned, and a large percentage of merchandise returns occur within a matter of days of the
selling transaction. The Company uses historical return patterns to estimate expected returns.
Information Technology
Company management believes that technological investments are necessary to support its business operations and strategies, and, as a result, the
Company is continually upgrading its information systems to improve efficiency and productivity. Between 2006 and 2009, the Company completed significant
upgrades to its merchandising planning and allocation systems and installed new point-of-sale equipment and software with enhanced clienteling capabilities in
each of its SFA stores.
3
Source: SAKS INC, 10-K, March 18, 2010 Powered by Morningstar® Document Research℠