As part its long-term expansion opportunity, Saks Fifth Avenue OFF 5th – a part of Saks Incorporated (SKS) plans to add five new stores in its portfolio for 2012.
Further, the new stores will be located in upscale outlets of Merrimack, Syracuse, Livermore, Grand Prairie, and Nashville. The Merrimack store will be the first Saks Fifth Avenue OFF 5TH in New Hampshire, and the store in Nashville will be a replacement store for the one lost in the 2010 flood in Tennessee.
In addition, each store will feature an open air loft-like environment and will range from 25,000 to 28,000 square feet. Further, the layout will offer maximized efficiency and flexibility, while the space will be bright and uncluttered. Additionally, all fixtures will be on casters, ensuring easy movement and all hardware will be interchangeable between fixtures.
Being the savvy shopper's premier source for value-priced designer clothing and accessories, Saks Fifth Avenue OFF 5TH’s new stores will have a collection of the best designer names in sportswear, handbags, shoes and more including an expanded assortment of fine jewelry and a newly launched beauty department under the label Saks Fifth Avenue.
Saks has recently opened new Saks Fifth Avenue OFF 5TH stores in Kansas City, KS and Oklahoma City, OK and plans to open stores in Charleston, SC, Northbrook, IL, and Sugar Land, TX (replacement store) later in 2011.
Saks’s stores and operations comprise Saks Fifth Avenue (these are principally free-standing stores in exclusive shopping destinations or anchor stores in upscale regional malls), Saks Fifth Avenue OFF 5Th (these stores primarily target the value-conscious customers) and Saks Fifth Avenue e-commerce operations known as Saks Direct.
Saks delivered a second-quarter 2011 adjusted loss per share of 5 cents, which was better than the Zacks Consensus Loss Estimate of 8 cents on August 17. The results reflect strong same-store sales growth and gross margin expansion.
Management is optimistic about its performance in fiscal 2011, as it has seen strong growth in sales across store formats, thanks to its merchandising, service and marketing initiatives. Further, the company intends to be very strategic in its SG&A spending, inventory management and capital expenditure investments.
However, Saks remains concerned with the recent volatility and downturn in the financial markets and the overall uncertainty in the macroeconomic environment. The company is therefore expected to strategize with its expense, capital, and inventory spending, making investments in areas with the most potential for profitable growth.
Saks operates 59 Saks Fifth Avenue OFF 5TH stores, 46 Saks Fifth Avenue stores and saks.com. Saks shares maintain a Zacks #2 Rank, which translates into a short-term Buy recommendation. Our long-term recommendation for the stock remains Outperform.
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