Saks Fifth Avenue 2010 Annual Report Download - page 3

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PART I
Item 1. Business.
General
The operations of Saks Incorporated, a Tennessee corporation first incorporated in 1919, and its subsidiaries
(together the “Company”) consist of Saks Fifth Avenue (“SFA”), Saks Fifth Avenue OFF 5TH (“OFF 5TH”),
and SFA’s e-commerce operations (“Saks Direct”).
The Company is primarily a fashion retail organization offering a wide assortment of distinctive luxury
fashion apparel, shoes, accessories, jewelry, cosmetics, and gifts. SFA stores are principally free-standing stores
in exclusive shopping destinations or anchor stores in upscale regional malls. Customers may also purchase SFA
products online at saks.com or by catalog. OFF 5TH is intended to be the premier luxury off-price retailer in the
United States. OFF 5TH stores are primarily located in upscale mixed-use and off-price centers and offer luxury
apparel, shoes, and accessories, targeting the value-conscious customer. As of January 29, 2011, the Company
operated 47 SFA stores with a total of approximately 5.5 million square feet and 57 OFF 5TH stores with a total
of approximately 1.6 million square feet.
Merchandising, sales promotion, and store operating support functions reside in New York, New York. The
back office sales support functions for the Company, such as accounting, credit card administration, store
planning, and information technology, are located principally in the Company’s operations center in Jackson,
Mississippi or in the SFA corporate offices in New York City.
The Company’s fiscal year ends on the Saturday closest to January 31. Fiscal years 2010, 2009, and 2008
each contained 52 weeks and ended on January 29, 2011 (“2010”), January 30, 2010 (“2009”), and January 31,
2009 (“2008”), respectively.
Merchandising
The Company’s stores and e-commerce operations carry luxury merchandise from both core vendors and
new and emerging designers, supplemented with select private brand offerings. The Company has key
relationships with the leading American and European fashion houses, including Giorgio Armani, Chanel, Gucci,
Prada, Louis Vuitton, St. John, Zegna, Theory, Cartier, David Yurman, Hugo Boss, Elie Tahari, Tory Burch,
Ralph Lauren, Akris and Burberry, among many others.
The Company has developed a knowledge of each of its trade areas and customer bases for its operations.
This knowledge is gained through use of on-line merchandise information, store visits by senior management and
merchandising personnel, and frequent communication between merchandising staff and store management. The
Company strives to tailor each store’s merchandise assortment to the characteristics of its trade areas and
customer bases and to the lifestyle needs of its local customers.
Certain departments in the Company’s SFA stores are leased to independent companies in order to provide
high quality service and merchandise where specialization and expertise are critical. The leased departments are
designed to complement the Company’s owned merchandising departments. The principal leased departments in
the SFA stores are furs and certain designer handbags. The terms of the lease agreements typically are between
one and seven years and may require the lessee to pay for a portion of the fixtures and provide its own
employees. Management regularly evaluates the performance of the leased departments and requires compliance
with established customer service guidelines.
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