Saks Fifth Avenue 2011 Annual Report Download - page 54

SAKS INCORPORATED & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
The following table summarizes net sales by major merchandise category for 2011, 2010, and 2009:
2011 2010 2009
Net Sales % of Sales Net Sales % of Sales Net Sales % of Sales
Women’s apparel .......$ 1,049,760 34.8% $ 1,001,783 36.0% $ 961,762 36.5%
Women’s accessories .... 580,568 19.3% 537,301 19.3% 508,564 19.3%
Cosmetics and
fragrances ............. 368,867 12.2% 357,023 12.8% 357,931 13.6%
Men’s apparel, shoes, and
accessories ........... 487,352 16.2% 449,957 16.2% 434,909 16.5%
Women’s shoes ......... 368,137 12.2% 315,725 11.3% 258,603 9.8%
Other ................. 158,909 5.3% 123,956 4.4% 109,763 4.3%
Total ................$ 3,013,593 100.0% $ 2,785,745 100.0% $ 2,631,532 100.0%
Cash and Cash Equivalents
Cash and cash equivalents primarily consist of cash on hand in the stores, deposits with banks, and investments
with banks and financial institutions that have original maturities of three months or less. Cash equivalents are
stated at cost, which approximates fair value. Cash equivalents totaled $195,449 and $190,007 as of January 28,
2012 and January 29, 2011, respectively, primarily consisting of money market funds, demand deposits, and
time deposits. Income earned on cash equivalents was $1,252, $551, and $36 for 2011, 2010, and 2009,
respectively, and was reflected in other income on the accompanying Consolidated Statements of Income.
There were no compensating balance arrangements as of January 28, 2012. The Company had a compensating
balance of $10,000 as of January 29, 2011, related to the Company’s purchasing card program.
Merchandise Inventories and Cost of Sales
Merchandise inventories are stated at the lower of cost or market. Cost is determined using the retail first-in,
first-out (“FIFO”) method and includes freight, buying and distribution costs. The Company takes markdowns
related to slow moving inventory, ensuring the appropriate inventory valuation.
The Company regularly records a provision for estimated shrinkage, thereby reducing the carrying value of
merchandise inventory. A complete physical inventory of all of the Company’s stores and distribution facilities is
performed annually, with the recorded amount of merchandise inventory being adjusted to coincide with this
physical count. The differences between the estimated amount of shrinkage and the actual amount realized
have been insignificant.
The Company receives vendor-provided support in different forms. When the vendor provides support for
inventory markdowns, the Company records the support as a reduction to cost of sales. Such support is recorded in
the period that the corresponding markdowns are taken. When the Company receives inventory-related support
that is not designated for markdowns, the Company includes this support as a reduction of the cost of purchases.
Consignment merchandise on hand of $93,897 and $109,877 as of January 28, 2012 and January 29, 2011,
respectively, is not reflected on the Consolidated Balance Sheets.
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