Saks, Inc. (SKS)

palumbah (< 20) Submitted: 10/12/2008 9:13:26 PM : Start Price: $6.30 SKS Score: +19.04

This will be a bad Christmas shopping season for Saks. Last year it made most of its sales with heavy purchases by European tourists taking advantage of the favorable exchange rates because fewer American aspirational shoppers had the cash to really shop there. This year I see considerably fewer tourists. Their usual customers only come out in force when there's a sale. Further, their choice of fashions in the windows has taken a far more conservative bent. It is very '60's with little embellishment, nothing from any couture lines, and not a Christian Loubutin in sight. That's not a good sign for a store with a shoe department so big that it has its own zip code. (Literally.) This may seem frivolous, but luxury retailers only bank on conservative clothing when they realize their customers have to work harder to rationalize their purchases and that they will likely have lower sales. My suspicions were confirmed when I read that Saks is cutting its sales projections for the coming quarter.

While I don't see Saks heading for Chapter 11 anytime soon, I don't think this will be a typical season for them.