Summary of Significant Accounting Policies (Policy)

3 Months Ended

Apr. 28, 2012

Summary of Significant Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and in compliance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Operating results for the three months ended April 28, 2012 are not necessarily indicative of the results that may be expected for the fiscal year ending February 2, 2013 (“fiscal year 2012”). The financial statements include the accounts of Saks Incorporated and its subsidiaries (collectively, the “Company”). All intercompany amounts and transactions have been eliminated.

The accompanying Consolidated Balance Sheet as of January 28, 2012 has been derived from the audited financial statements at that date but does not include all of the disclosures required by GAAP. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company's Annual Report on Form 10-K/A for the fiscal year ended January 28, 2012.

The Company's operations consist of Saks Fifth Avenue (“SFA”), SFA's e-commerce operations (“Saks Direct”), and Saks Fifth Avenue OFF 5TH (“OFF 5TH").

Net Sales

Net Sales

Net sales include sales of merchandise (net of returns and exclusive of sales taxes), commissions from leased departments, shipping and handling revenues related to merchandise sold, and breakage income from unredeemed gift cards. Sales of merchandise from the Company's retail stores are recognized at the time customers provide a satisfactory form of payment and take delivery of the merchandise. Sales of merchandise from Saks Direct are recognized upon estimated receipt of merchandise by the customer. Revenue associated with gift cards is recognized upon redemption of the card. The Company estimates the amount of goods that will be returned for a refund and reduces sales and gross margin by that amount. Commissions from leased departments included in net sales were $11,114 and $8,726 for the three months endedApril 28, 2012, and April 30, 2011, respectively. Leased department sales were $76,645 and$63,415for the three months endedApril 28, 2012and April 30, 2011, respectively, and were excluded from net sales.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents primarily consist of cash on hand in the stores, deposits with banks, and investments with banks and financial institutions that have original maturities of three months or less. Cash equivalents are stated at cost, which approximates fair value. Cash equivalents totaled $183,695, $195,449 and $192,786 as of April 28, 2012, January 28, 2012 and April 30, 2011, respectively, primarily consisting of money market funds, demand deposits, and time deposits. Income earned on cash equivalents was $190 and$244 for the three months ended April 28, 2012and April 30, 2011, respectively, and is included in other income on the accompanying Consolidated Statements of Income.

Inventory

Inventory

Merchandise inventories are stated at the lower of cost or market and include freight, buying, and distribution costs. The Company takes markdowns related to slow moving inventory, ensuring the appropriate inventory valuation. The Company receives vendor-provided support in different forms. When the vendor provides support for inventory markdowns, the Company records the support as a reduction to cost of sales. Such support is recorded in the period that the corresponding markdowns are taken. When the Company receives inventory-related support that is not designated for markdowns, the Company includes this support as a reduction of the cost of purchases.

Impairments and Dispositions

Impairments and Dispositions

Impairment and disposition costs include costs associated with store closures, including employee severance and lease termination fees, asset impairment and disposal charges, and other store closure activities. Additionally, impairment and disposition costs include long-lived asset impairment charges related to assets held and used and losses related to asset dispositions made during the normal course of business.The Company continuously evaluates its real estate portfolio and closes underproductive stores in the normal course of business as leases expire or as other circumstances dictate.

During the three months ended April 28, 2012, the Company incurred charges of $310 primarily related to final expenses associated with the Saks Fifth Avenue Pittsburgh store closing.During the three months ended April 30, 2011, the Company incurred store closing costs of $2,868 primarily due to a lease termination fee for the relocation of its Hilton Head OFF 5TH store.

Segment Reporting

Segment Reporting

SFA, Saks Direct, and OFF 5TH have been aggregated into one reportable segment based on the aggregation criteria outlined in the authoritative accounting literature.

Fair Value Measurements

Fair Value Measurements

As of April 28, 2012 and April 30, 2011, the Company had no financial assets or liabilities measured at fair value on a recurring basis. The carrying value of the Company's financial instruments, including cash and cashequivalents, receivables, accounts payable, and accrued expenses as of April 28, 2012, January 28, 2012, and April 30, 2011 approximates their fair value due to the short-term nature of these financial instruments. See Note 5 for fair value disclosures related to the Company's long-term debt.

Operating Leases

Operating Leases

The Company leases the land or the land and building at many of its stores, as well as its distribution centers, administrative facilities, and certain equipment. Most of these leases are classified as operating leases. Most of the Company's lease agreements include renewal periods at the Company's option. Store lease agreements generally include rent holidays, rent escalation clauses, and contingent rent provisions that require additional payments based on a percentage of sales in excess of specified levels. Contingent rental payments are recognized when the Company determines that it is probable that the specified levels will be reached during the fiscal year. For leases that contain rent holiday periods and scheduled rent increases, the Company recognizes rent expense on a straight-line basis over the lease term from the date the Company takes possession of the leased property. The difference between the straight-line rent amounts and amounts payable under the leases are recorded as deferred rent. Tenant improvement allowances and other lease incentives are recorded as deferred rent liabilities and are recognized on a straight–line basis over the life of the lease. As of April 28, 2012, January 28, 2012, and April 30, 2011 deferred rent liabilities were $70,812,$66,524,and $61,201, respectively. These amounts are included in other long-term liabilities on the Consolidated Balance Sheets.

Gift Cards

Gift Cards

The Company sells gift cards with no expiration dates. At the time gift cards are sold, no revenue is recognized and a liability is established for the value of the card. The liability is relieved and revenue is recognized when the gift cards are redeemed by the customer for merchandise. The liability for unredeemed gift cards was$26,258, $28,933, and $28,663 as of April 28, 2012, January 28, 2012, and April 30, 2011, respectively and is included in accrued expenses on the Consolidated Balance Sheets.