Saks Fifth Avenue 2009 Annual Report Download - page 6

Download and view the complete annual report

Please find page 6 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
The Company’s information systems provide information deemed necessary for management operating decisions, cost management programs, and
customer service enhancements. Individual data processing systems include point-of-sale and sales reporting, purchase order management, receiving,
merchandise planning and control, payroll, human resources, general ledger, and accounts payable systems. Bar code ticketing is used, and scanning is utilized at
point-of-sale terminals. Information is made available on Company systems to merchandising staff and store management on a timely basis.
The use of EDI technology allows the Company to speed the flow of information and merchandise in an attempt to capitalize on emerging sales trends,
maximize inventory turnover, and minimize out-of-stock conditions. EDI technology includes an advance shipping notice system (“ASN”). The ASN system
identifies discrepancies between merchandise that is ready to be shipped from a supplier’s warehouse and that which was ordered from the supplier. This early
identification provides the Company with a window of time to resolve any discrepancies in order to speed merchandise through the distribution facilities and into
its stores.
Marketing
The Company’s marketing principally emphasizes the latest fashion trends in luxury merchandise and primarily utilizes direct mail (catalogs) and email
advertising, supplemented with national and local marketing efforts. To promote its image as one of the primary sources of luxury goods in its trade areas, the
Company sponsors numerous fashion shows and in-store special events highlighting the designers represented in the Company’s stores. The Company also
participates in “cause-related” marketing. This includes special in-store events and related advertising designed to drive store traffic, while raising funds for
charitable organizations and causes such as women’s cancer research. The Company’s in-house marketing and sales promotion staff works with outside agencies
to produce the Company’s marketing materials and campaigns.
The Company utilizes data captured through the use of proprietary credit cards offered by HSBC Bank Nevada, N.A. (“HSBC”) to develop advertising and
promotional events targeted at specific customers who have purchasing patterns for certain brands, departments, and store locations.
Proprietary Credit Cards
HSBC offers proprietary credit card accounts to the Company’s customers. In April 2003, the Company entered into a program agreement with HSBC for
a term of ten years expiring in 2013 pursuant to which HSBC owns and issues proprietary credit cards to the Company’s customers. Pursuant to a servicing
agreement with HSBC with a ten-year term expiring in 2013, the Company continues to provide key customer service functions, including new account
openings, transaction authorizations, billing adjustments and customer inquiries, and receives compensation from HSBC for the provision of these services.
Under the terms of the original program agreement, HSBC assumed substantially all risks while sharing with the Company certain revenue generated by
interest and fees on the portfolio. Saks and HSBC have entered into several amendments to the program agreement since 2003. In October 2009, the Company
and HSBC entered into a fifth amendment to the program agreement in response to macroeconomic conditions and portfolio performance, which provides for
certain changes to the allocation of risk and revenue sharing between the parties. The fifth amendment, which became effective February 1, 2010, provides for
HSBC to share with the Company certain credit losses of the card portfolio and also provides increased revenue sharing to the Company.
In September of 2006, the Company entered into agreements with HSBC and MasterCard International Incorporated to issue co-branded MasterCard cards
to new and existing proprietary credit card customers. Under this program, qualifying customers are issued an SFA and MasterCard co-branded credit card that
functions as a
4
Source: SAKS INC, 10-K, March 18, 2010 Powered by Morningstar® Document Research℠