Saks Fifth Avenue 2010 Annual Report Download - page 7

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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 29, 2011, the Company employed approximately 12,900 associates, of which approximately
24% 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. Less than 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. The Company does not believe that
inflation has had a material effect on its results of operations during the periods presented; however, there can be
no assurance that the Company’s business will not be affected by inflation in the future.
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 2010 and 2009 and charges
of $44.5 million in 2008 associated with closing the stores.
Website Access to Information
The Company provides access, free of charge, to the Company’s annual report on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably
practicable after the reports are electronically filed with or furnished to the Securities and Exchange Commission
(“SEC”) through the Company’s website, www.saksincorporated.com.
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