By and  on August 25, 2011

NEW YORK — The world’s richest man clearly believes in the longevity of the luxury retail boom — and he’s already almost $1 million richer because of it.

Carlos Slim Helú has again upped his stake in Saks Inc. shares, spending another $2.2 million on Aug. 19 to increase his shareholding to slightly more than 26.5 million shares, or about 16.9 percent of the retailer, according to a regulatory filing Wednesday with the Securities and Exchange Commission.

As reported in WWD Tuesday, a series of SEC filings by Slim on Monday reflected purchases on Aug. 18, two days after Saks posted second-quarter earnings that showed reduced losses. The purchases were through Inmobiliaria Carso SA de CV, which is controlled by the Slim family.

The two-day total for the Mexican multibillionaire was 876,000 shares at a cost of just under $7 million, an average of $7.94 a share. With Saks’ shares closing Wednesday up 32 cents, or 3.7 percent, at $9.06, the recently purchased shares are worth more than $7.94 million, giving Slim a paper profit of nearly $1 million in less than a week.

His total holdings in Saks, based on Wednesday’s close, are worth more than $240 million.

The Aug. 18 purchases totaled just under 600,000 shares at an average of $7.91 each while those on Aug. 19 involved 279,000 shares at an average price of $8. Shares closed at $7.81 on Aug. 18 and $7.99 on Aug. 19.

Slim is no stranger to retail. His global conglomerate is Grupo Carso, which holds the largest telecommunications company in Latin America. Grupo Carso also owns under its umbrella Grupo Sanborns SA de CV, which in turn controls Sears Mexico, as well as Sanborns stores.

Slim’s 16.9 percent is based on Saks’ total diluted shares outstanding of 156.7 million as of July 30. The holding puts him ahead of Diego Della Valle, chairman and chief executive officer of Tod’s SpA, who holds nearly 22.7 million shares of Saks, or a 14.5 percent stake.

Saks declined comment, as did Stephen I. Sadove, Saks’ chairman and ceo.

Sadove is on friendly terms with both Slim and Della Valle, according to sources. Tod’s is a brand that sells at Saks. And the Slim family’s Grupo Sanborns owns and operates two Saks Fifth Avenue stores in Mexico City under a license agreement with Saks. While there has been significant speculation about what Slim’s or Della Valle’s plans might be for Saks given their substantial shareholdings in the retailer, the decision to acquire shares could be just good investment sense rather than a takeover maneuver. Della Valle has repeatedly said he simply views Saks as a good investment.

Whatever his plans might be, the purchase of additional shares are a clear sign that Slim believes in the future of Saks and luxury retailing, even as there are increasing fears over the strength of the economic recovery and the possibility of a double-dip recession. Luxury groups and retailers have been strong performers over the last year as consumers have rushed back to the high-end sector. Last month, Saks led all apparel retailers with a same-store sales increase of 15.6 percent, while Neiman Marcus Inc. and Nordstrom Inc. were up 7.7 percent and 6.6 percent, respectively.

Sadove said when Saks reported earnings that the company is taking a generally cautious stance toward the rest of the year, even though he doesn’t expect another major downturn. In the company’s conference call to Wall Street analysts, Sadove said Saks would be “very strategic” when it came to capital spending and inventory this year.

In the three months ended July 30, Saks narrowed its losses to $8.4 million, or 5 cents a share, from $32.2 million, or 21 cents, a year earlier. Analysts were expecting steeper losses of 9 cents a share during the quarter. Sales rose 13 percent to $670.2 million from $593.1 million, with comparable-store sales increasing 15.5 percent.

James Goldstein, retail analyst at CreditSights, maintained his “overweight” recommendation on Saks after the earnings report.

The analyst noted: “Early results in August seem to support [Saks’] view that shopping is carrying on with little perceptible change.…Full-price sell-through remains at prerecession highs and the sales outperformance versus expectations has left inventories fairly tight (up 2.7 percent on comp basis, well below sales growth in the quarter as well as sales expectations for the remainder of the year).”

Goldstein noted that growth in gross margins and selling, general and administrative leverage helped drive a $19 million increase in adjusted earnings before interest, taxes, depreciation and amortization to $30 million.

He also noted that traffic and average ticket were both improved in the quarter, driven by more full-price selling and a rebound in demand for “best” items, on the good-better-best scale.

“This indicates that Saks is returning to its core competencies as a purveyor of luxury goods (rather than having to compete as a glorified department store versus the likes of Macy’s and others, as seen during the depths of the recession),” Goldstein wrote.

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