BIRMINGHAM, Ala. — Top executives of Saks Inc., after a year of investigations and major strategic transition, outlined for shareholders here Thursday efforts to turn around Saks Fifth Avenue with better marketing, merchandising and inventory management.
They didn't comment on a possible sale of SFA, but indicated after the meeting that there were no plans to sell.
The annual shareholders meeting, attended by several dozen people, rejected a proposal for an annual election of board members to replace the staggered system in which a few directors are picked each year for three-year terms.
R. Brad Martin, chairman and chief executive officer, said the third-quarter balance sheet had been strengthened by income from the $623 million sale of the firm's Proffitt's/McRae's division to Belk and the insurance settlement from Hurricane Katrina's damage to the Saks Fifth Avenue New Orleans store. He said SFA's performance is improving and that Parisian, under the Saks Department Store Group, was "solid." Saks Inc. also is selling its northern department store group to Bon-Ton for $1.2 billion.
"We weren't happy with SFA's 2005 performance," Steve Sadove, vice chairman and chief operating officer, said in an interview after the meeting. "It's underperforming the competition, but it's capable."
Saks stock on Thursday increased 0.6 percent, closing at $16.72 in New York Stock Exchange trading.
Sadove said the top priority was for better inventory management to help gross margins, which should start to show up next year.
Andrew Jennings, SFA's president and chief operating officer, said the luxury chain was implementing new inventory management systems and reeducating buying and merchandising teams.
SFA will invest in building the Saks luxury image with customers — increasing marketing budgets in double digits for more events like fall 2005's Wild About Cashmere, which "generated store traffic and sales, in cashmere and luxury areas generally," Jennings said. He also pointed to three new restaurants at SFA as part of the strategy to create a luxury experience for customers and said contemporary and designer apparel, shoes and handbags were key growth areas.
The retailer is still under investigation by the Securities and Exchange Commission and the U.S. Attorney in Manhattan regarding improperly collected markdowns between 1996 and 2003. After the meeting, Sadove said vendor paybacks, set by an internal audit committee, were almost completed. He declined comment on the SEC and U.S. Attorney's Office inquiries.
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