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Della Valle Adds to Holdings in Saks

Tod's chairman Diego Della Valle spent $22.3 million for an additional 2.9 million shares of the luxe retailer, Saks Fifth Avenue.

Having more than doubled his money on his earlier investments in Saks Inc., Diego Della Valle has boosted his bet on the recovery of the luxury retailer.

This story first appeared in the March 12, 2010 issue of WWD.  Subscribe Today.

Through his personal investment vehicle, Diego Della Valle & C. S.A.P.A., the chairman and chief executive officer of Italy’s Tod’s SpA this week spent $22.3 million for an additional 2.9 million shares of the luxe retailer, according to a filing with the Securities and Exchange Commission.

The investment comes on top of the 8.48 million shares of Saks that Della Valle acquired last year for $30.3 million. He now controls 11.38 million shares of Saks’ common stock, or 7.1 percent of those outstanding. Among noninstitutional investors, only Mexican telecommunications billionaire and the world’s richest man Carlos Slim Helú has more, with 25.62 million shares of the firm, or 16.1 percent of those outstanding.

Saks has proven to be a very good investment for Della Valle. He bought 8.48 million shares of the firm between Feb. 20 and May 7 last year for $30.3 million, an average price of $3.57 a share.

As of Thursday’s closing price, that portion of his holdings was worth $67.7 million, making for a $37.4 million gain.

Della Valle couldn’t be reached for comment Thursday on his additional shares. In an interview with WWD last month, he said of his previous expenditures: “It was a great investment and it’s a great brand.”

The Italian tycoon said last year that the stake in Saks was “a strategic investment of the family, not of Tod’s.” And Stephen I. Sadove, Saks’ chairman and ceo, has described Della Valle’s holdings as “a passive investment.”

Della Valle extended his stake with three block purchases at prices ranging from $7.61 to $7.87 a share.

And he’s already making money on the investment.

Shares of Saks hit a new 52-week high of $8.02 in intraday trading Thursday, and ended the day with a 1.3 percent rise to $7.98. Retail shares in general have been on the advance, first bouncing back from their recession lows last year and more recently gaining on signs that consumer spending might keep rising.

As it has nursed its top and bottom lines, Saks also has done considerable work on its balance sheet. The retailer issued $120 million of convertible notes in May, completed a $100 million stock offering in October and negotiated a two-year extension and amendment to its $500 million credit facility in November. The firm’s 2009 net losses narrowed to $57.9 million, from $158.8 million in 2008, on a 14.7 percent drop in comparable-store sales.

But the retailer’s comps climbed 2 percent last month as the sector enjoyed a bit of a revival.

On Thursday, the S&P Retail Index picked up 3.47 points, or 0.8 percent, to 439.96 for its fifth advance in the last six sessions. The three major U.S. indices rallied to gains, with the Dow Jones Industrial Average up 0.4 percent to 10,611.84.