Saks Fifth Avenue 2010 Annual Report Download - page 24

NET SALES
For the year ended January 29, 2011, total net sales increased 5.9% to $2,785.7 million from $2,631.5
million for the year ended January 30, 2010. Consolidated comparable store sales increased $161.6 million, or
6.4%, from $2,531.6 million for the year ended January 30, 2010 to $2,693.2 million for the year ended
January 29, 2011.
Comparable store sales are calculated on a rolling 13-month basis. Thus, to be included in the comparison, a
store must be open for 13 months. The additional month is used to transition the first month impact of a new
store opening. Correspondingly, closed stores are removed from the comparable store sales comparison when
they begin liquidating merchandise. Expanded or remodeled stores are included in the comparable store sales
comparison, except for the periods in which they are closed for remodeling and renovation.
GROSS MARGIN
For the year ended January 29, 2011, gross margin was $1,117.3 million, or 40.1% of net sales, compared to
$963.4 million, or 36.6% of net sales, for the year ended January 30, 2010. The increase in gross margin dollars
and gross margin rate was primarily the result of higher sales, increased full-price selling and a reduced level of
promotional activity.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (“SG&A”)
For the year ended January 29, 2011, SG&A was $716.0 million, or 25.7% of net sales, compared to $674.3
million, or 25.6% of net sales, for the year ended January 30, 2010. The increase of $41.6 million in expenses
was primarily driven by higher variable costs associated with the $154.2 million sales increase for the year as
well as incremental expenses incurred to support the growth in Saks Direct. Additionally, the Company
experienced a reduction in proprietary credit card income related to the previously announced contract changes
with HSBC.
OTHER OPERATING EXPENSES
For the year ended January 29, 2011, other operating expenses were $298.1 million, or 10.7% of net sales,
compared to $314.3 million, or 12.0% of net sales, for the year ended January 30, 2010. The decrease of $16.2
million was principally driven by a decrease in depreciation and amortization expense of $16.5 million as a result
of reduced capital expenditures over the past twelve months and asset impairment charges recorded during the
year ended January 30, 2010. Additionally, the Company incurred lower property and equipment rentals of $3.3
million and a decrease in store pre-opening costs of $1.0 million. These decreases were partially offset by an
increase in taxes other than income taxes of $4.6 million.
IMPAIRMENTS AND DISPOSITIONS
For the year ended January 29, 2011, Impairments and Dispositions included net charges of $13.1 million
compared to net charges of $29.3 million for the year ended January 30, 2010. The current year charges included
closing costs associated with the Plano, Texas; Mission Viejo, California; Southampton, New York; Portland,
Oregon; San Diego, California; and Charleston, South Carolina SFA store closures, the Reno, Nevada OFF 5TH
store closure, and the previously announced agreement to close the Denver, Colorado SFA store during the first
quarter ending April 30, 2011. The Company incurred $12.1 million of store closing-related costs associated with
those locations, including $10.1 million of net lease termination costs, $4.2 million of asset impairment and
disposal costs, $2.5 million of severance costs, and $3.8 million of other store-closing related costs, all of which
were offset in part by a deferred rent benefit of $8.5 million. Also included in Impairments and Dispositions for
2010 were $1.0 million of asset impairments and dispositions in the normal course of business. The prior year
charges were primarily due to asset impairments and dispositions in the normal course of business.
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