I have started a long position on the luxury brand retailer SAKS [SKS] with an entry at $16.56 levels.
Company has a market cap of $2.25 billion. Revenues stand at $3.14 bln, Gross profit ttm is $1.14 bln. Net Income came in at almost $21 Million. Total cash is about $130 Mln versus a Total debt of $576 Mln. 130 Mln floater.
I would agree with the argument of these numbers, not necessarily constituting fundamentally a strong picture in relation to co's overall health. After all, Saks PEG stands at 1.43 however, I think this is a good relative long-term entry ; in light of management's efforts to turn the tide around in their favor. Saks has reported encouraging results over the last few quarters.
The company has invested efforts and resources in rebuilding the brand and getting rid off unwanted assets eating into their revenue line. Operating margins need to definitely improve from present levels of 1.76% ; and I believe we will start seeing improvements and sales growth over the next several quarters.
The luxury retail usually remains relatively unaffected by consumer spending slow-downs. Holding this ticker for a possible end of fiscal '07 run to over $23 levels.
ron
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