Is Saks Inc desperate for cash? Saks, which had $649 million in debt as of Nov. 1, has suffered from downgrades from stock analysts and debt ratings agencies recently. This means its cost of capital is rising while its revenues decline amid the consumer recession.
Moves by Saks to launch a Black Friday sale four days early seem to indicate that the company may be in a desperate attempt to raise cash. Saks initiated a 70% discount on designer goods on Tuesday this week. Fashion industry professionals say this likely indicates that Saks is selling merchandise at cost or even at a loss.They said that one reason Saks would need cash would be if the company was having trouble raising money on the short term debt market to buy new inventory.
Here’s the good news: it seems to be working. Shoppers at Saks say the store was crowded and the tables strewn with clothes by customers eager to take advantage of the sale.
At the shopping blog Racked.com, a reader reports: “In the women’s shoe department there must have been 400 women and all the high-end purses were completely gone (not sure if sold or taken off the floor).”
If Saks does need to raise cash in a rush, it seems to be meeting that need.
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