Saks Fifth Avenue 2009 Annual Report Download - page 8

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Table of Contents
associates is generally a commission-based program. Sales associates undergo extensive service, selling, and product-knowledge training and are encouraged to
maintain frequent, personal contact with their customers. Sales associates are encouraged to utilize detailed customer data available through the Company’s
point-of-sale equipment and software for their clienteling efforts, send personalized thank-you notes, and routinely communicate with customers to advise them
of new merchandise offerings and special promotions. Typical SFA stores also provide comfortable seating areas, and most SFA stores offer a complimentary
personal shopping service called “The Fifth Avenue Club.”
Seasonality
The Company’s business, like that of many retailers, is subject to seasonal influences, with a significant portion of its sales and net income realized during
the second half of the fiscal year, which includes the holiday selling season. Approximately 30% of the Company’s sales are generated during the fourth quarter,
and normally a large portion of its operating income is generated during the fall season.
Competition
The retail business is highly competitive. The Company’s stores primarily compete with several national and regional department stores, specialty apparel
stores, designer boutiques, outlet stores, and mail-order and e-commerce retailers. Management believes that its knowledge of its trade areas and customer base,
combined with the Company’s high level of customer service, broad selection of quality fashion merchandise at appropriate prices, innovative marketing, and
strategic store locations, positions the Company for a competitive advantage.
Associates
As of January 30, 2010, the Company employed approximately 12,400 associates, of which approximately 22% were employed on a part-time basis. The
Company hires additional temporary associates and increases the hours of part-time associates during seasonal peak selling periods. Approximately 1.0% of the
Company’s associates are covered by collective bargaining agreements. The Company considers its relations with its associates to be good.
Inflation and Deflation
Inflation and deflation affect the costs incurred by the Company in its purchase of merchandise and in certain components of its selling, general and
administrative expenses (“SG&A”). The Company attempts to offset the effects of inflation, which has occurred in recent years in SG&A.
Discontinued Operations
As of January 31, 2009, the Company discontinued the operations of its Club Libby Lu (“CLL”) business, the operations of which are presented as
discontinued operations in the Consolidated Statements of Income and the Consolidated Statements of Cash Flows for the current and prior year periods. CLL
consisted of 98 leased, mall-based specialty stores, targeting girls aged 4-12 years old. CLL generated revenues of approximately $52.2 million for 2008 and was
not profitable. The Company incurred nominal charges in 2009 and charges of $44.5 million in 2008 associated with closing the stores.
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Source: SAKS INC, 10-K, March 18, 2010 Powered by Morningstar® Document Research℠