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Celebrity Powers Saks Fifth Avenue

Zacks Equity Research

Luxury retailer, Saks Inc. (SKS), has partnered with Emmy nominated actress, Kerry Washington, to add celebrity power to its namesake brand – Saks Fifth Avenue.

The celebrity has starred in the hit ABC series Scandal’ and will endorse the brand through in-store, online and on-screen platforms starting Oct 2. Moreover, Saks’ several products and accessories will be sported by Kerry Washington will be promoted through the upcoming episodes of ‘Scandal’.

In return, the New York flagship store of Saks Fifth Avenue will showcase a window installation of the trends worn by Ms. Washington’s character Olivia Pope in the series.

The partnership is going to be beneficial for the retailer as the series will familiarize youngsters with Saks’ fashion trends as Olivia Pope sports them.

The company is aiming to boost sales of the Saks Fifth Avenue by these promotional campaigns. After suffering decline in comps and poor top line results for several past quarters, Saks has recently ramped up its marketing and promotional activity (advertising campaigns and loyalty credit card programs) to boost sales. Although such promotional campaigns have decreased merchandise margins, it is expected to drive earnings over the long term. It has chosen the omni channel retailing in order boost sales in the coming quarter.

Saks will sell itself to Canada’s private retailer Hudson’s Bay, parent of apparel chains like Lord & Taylor’s in the U.S. The deal is expected to be completed by end of calendar 2013.

Saks currently holds a Zacks Rank #4 (Sell). Other stocks in the retail and wholesale sector worth considering are Citi Trends Inc. (CTRN), Christopher & Banks Corporation (CBK), and Limited Brands Inc. (LTD). While Citi Trends and Christopher & Banks carry a Zacks Rank #1 (Strong Buy), Limited Brands carries a Zacks Rank #2 (Buy).

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