Saks to Become Part of Hudson's Bay - Analyst Blog


Luxury retailer Saks Inc. ( SKS ) is close to being taken over by Canada's department store chain Hudson's Bay, according to the New York Post reports. Although the deal has not yet been made public, the media reports that it is already final.

The Canadian chain and owner of Lord & Taylor's  stores, Hudson's Bay has been reported to pay between $17 and $18 a share for the company. Saks Chief Operating Officer (CEO) Steve Sadove is expected to resign from his post.

Despite Saks' underperformance in the past few quarters, the high-end luxury chain will add several premium brands to Hudson's portfolio. Moreover, the deal will bring several real estate facilities to Hudson's as most of Saks store locations will be converted into Lord & Taylor's as per the reports.

Saks, meanwhile, will have an easy access to the Canadian markets through Hudson's already established market in the region. This is particularly significant as Saks' close competitor, Nordstrom Inc. ( JWN ), is planning to expand its presence in Canada in the current fiscal year.

As of the end of its last quarter, Saks operated 42 Saks Fifth Avenue stores and 66 outlet stores. Although Saks has been reporting lower than expected sales per square feet, it has focused on executing its core merchandising, service and marketing strategies, through various operating initiatives.

Saks has taken initiatives to create more online, mobile and social digital marketing programs as part of its strategy to develop integrated multimedia campaigns and also reach out to a larger customer base. Moreover, Saks has implemented important systems and process enhancements to strengthen its omni-channel approach to the business, as it is quickly gaining popularity. Omni channel retailing enables multiple channels like mobile internet devices, computers, television, etc. to reach out to customers

The luxury retailer has reportedly attracted two more bidders recently - the Real estate investment firm, Starwood Capital Group LLC, and a Middle Eastern sovereign wealth fund, most likely from Qatar.

Saks currently holds a Zacks Rank #3 (Hold). Other stocks in the retail and wholesale sector worth considering include The Gap Inc. ( GPS ) and The Wet Seal Inc. ( WTSL ) carrying a Zacks Rank #1 (Strong Buy).

GAP INC (GPS): Free Stock Analysis Report

NORDSTROM INC (JWN): Free Stock Analysis Report

SAKS INC (SKS): Free Stock Analysis Report

WET SEAL INC -A (WTSL): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: CEO , GPS , JWN , SKS , WTSL

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