Saks Fifth Avenue 2011 Annual Report Download - page 4

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PART I
Item 1. Business.
Description of Business
The operations of Saks Incorporated, a Tennessee corporation first incorporated in 1919, and its subsidiaries
(together the “Company”) consist of Saks Fifth Avenue (“SFA”) stores and SFA e-commerce operations (“Saks
Direct”) as well as Saks Fifth Avenue OFF 5TH (“OFF 5TH”).
The Company is an omni-channel luxury retailer offering a wide assortment of distinctive 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 28, 2012, the Company
operated 46 SFA stores with a total of approximately 5.5 million square feet and 60 OFF 5TH stores with a total
of approximately 1.7 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, New York.
The Company’s fiscal year ends on the Saturday closest to January 31st. Fiscal years 2011, 2010, and 2009 each
contained 52 weeks and ended on January 28, 2012 (“2011”), January 29, 2011 (“2010”), and January 30, 2010
(“2009”), respectively.
Merchandising
The Company’s stores and Saks Direct 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, Oscar de la Renta, Dolce and
Gabbana, 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 knowledge of each of its trade areas and customer bases for its operations. This
knowledge is gained through use of on-line merchandise sell-through information, store visits by senior
management and merchandising personnel, and frequent communication between merchandising staff, store
management, and customers who shop in store and/or online. 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 and jewelry. 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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