KSS Kohls Corporation

Same-store sales at Saks Incorporated (SKS) went up 11.9% for the month of June, 2011, while it increased 12.3% in the five months ended July 2, 2011.

Owned sales surged 8.7% to $258.6 million for the five-week period ended July 2, 2011 compared with $237.9 million in the same period ended July 3, 2010.

Further on a year-to-date basis, owned sales increased 10.1% to $1,180.8 million for the five months ended July 2, 2011, compared with $1,072.3 million for the prior year five months ended July 3, 2010.

Saks Direct reported strong comparable store sales in June. In addition, the categories at Saks Fifth Avenue stores including women’s shoes and designer apparel; men’s clothing, sportswear, shoes, and accessories; and fine and fashion jewelry fuelled the sales growth.

Same-store sales at Saks’ peer company, Kohl’s Corporation (KSS) went up 7.5% in the five-week period ended July 2, 2011 compared with an increase of 5.9% posted in the year-ago period. June comparable store sales met management’s expectations.

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 (SFA) OFF 5TH  (these stores primarily target the value-conscious customers) and Saks Fifth Avenue e-commerce operations known as Saks Direct.

During the first quarter of 2011, the company’s Saks Fifth Avenue stores saw strong sales growth, particularly in women’s and men’s apparel, handbags and shoes. Saks Direct reported an approximately 25% increase in comparable same stores during the quarter. However, the performance of the Saks Fifth Avenue OFF 5TH was not as expected.

Store Update

As of July 5, 2011, Saks operated 46 SFA stores and 57 OFF 5TH stores.

Guidance

In the first quarter of 2011, Saks projected same-store sales to progress at the high-single digit rate for the second quarter of 2011 and mid to high single digit range during the second half of fiscal 2011.

Conclusion

Management is optimistic about Saks 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.

Saks shares maintain a Zacks #1 Rank, which translates into a short-term Strong Buy recommendation. Our long-term recommendation for the stock remains Neutral.

 
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