Saks Fifth Avenue 2009 Annual Report Download - page 7

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Table of Contents
traditional proprietary credit card when used at any SFA or OFF 5TH store and at www.saks.com or as a MasterCard card when used at any unaffiliated location
that accepts MasterCard cards. HSBC establishes and owns the co-brand accounts, retains the benefits associated with the ownership of the accounts, receives the
finance charge and other income from the accounts, and incurs the bad debts associated with the accounts.
Historically, proprietary credit card holders have shopped more frequently with the Company and purchased more merchandise than customers who pay
with cash or third-party credit cards. The Company also makes frequent use of the names and addresses of the proprietary credit card holders in its direct
marketing efforts.
The Company seeks to expand the number and use of the proprietary credit cards by, among other things, providing monetary incentives to sales associates
to open new credit accounts, which generally can be opened while a customer is visiting one of the Company’s stores. Customers who open accounts are entitled
to a discount on the first day’s purchases. Customers using the proprietary credit card are eligible for the SaksFirst loyalty program that rewards customers for
spending on their proprietary charge cards. Additionally, co-brand card customers earn SaksFirst points for purchases made at unaffiliated locations. Increased
spending on the proprietary cards is intended to result in an increased rate of reward. Rewards come in the form of electronic gift cards that are redeemable on
future purchases. In addition, members of the loyalty program are eligible for other rewards and benefits including special shopping events and travel discounts.
As of January 30, 2010, there were approximately 702,000 proprietary credit accounts that were active within the prior twelve months, accounting for
41.9% of the Company’s 2009 sales.
Trademarks and Service Marks
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 in the United States Patent and Trademark Office. The terms of these
registrations are generally ten years, and they are renewable for additional ten-year periods indefinitely so long as the marks are in use at the time of renewal. The
Company is not aware of any claims of infringement or other challenges to its right to use its marks that would have a material adverse effect on the Company’s
consolidated financial position, results of operations, or liquidity.
Reliance on Fifth Avenue Store
The Company’s Flagship SFA store located on Fifth Avenue in New York City accounted for approximately 19% of total Company sales in 2009 and
plays a significant role in creating awareness for the Saks Fifth Avenue brand name.
Customer Service
The Company believes that good customer service contributes to increased store visits and purchases by its customers.
The Company’s goal is to deliver an inviting, customer-focused shopping experience to each customer. At SFA and OFF 5TH, the Company seeks to
enable its customers to discover both accessible and high-end fashion in a warm, welcoming environment, guided by knowledgeable sales associates.
Compensation for sales
5
Source: SAKS INC, 10-K, March 18, 2010 Powered by Morningstar® Document Research℠