Shopping Spree Galore Expected as Saks Fifth Avenue Goes Public

There is much that glitters on the counters and racks of Saks Fifth Avenue, but to Wall Street, nothing shines as bright as the retailer itself.

Investors are expected to scarf up shares in Saks’ parent, Saks Holdings Inc., when it goes public today. Saks’ initial stock offering couldn’t be timed more perfectly--it comes as upscale stores are enjoying success on the trading floor as well as the selling floor.

“That’s where the focus is,” said analyst Eileen Gormley of the Pershing division of the investment firm Donaldson Lufkin & Jenrette. “The upscale retailers such as Tiffany are reporting encouraging results.”

Last week, after Tiffany & Co. said first-quarter earnings more than doubled, Wall Street was so delighted that the company’s stock rose more than 10% the day of the announcement. Two days later, Tiffany announced a stock split and a 43% increase in its dividend.

Gucci’s stock was priced at $22 each when the company had its initial public offering last October. Now the stock is trading in the $70 range.

Saks owner Investcorp, a Bahrain-based investment bank that also owned Gucci and Tiffany, is taking Saks public.

Saks’ stock was priced at $25 a share late Tuesday and begins trading today on the New York Stock Exchange under the symbol SKS. It will be abbreviated SaksHold in stock tables.

Investcorp is selling 16 million shares in Saks, or a little more than a quarter of the retailer’s equity. Saks said in its offering prospectus it would use the proceeds to pay down debt, which it listed as nearly $976 million.

The sale by Investcorp marks the first time the public will directly hold shares in Saks. After its founding in 1867, the company was privately held and operated as a division of Gimbel Bros. Inc., which was acquired by the British conglomerate BAT Industries in 1973. In 1990, BAT, which was divesting all its retail holdings, sold Saks to Investcorp for $1.6 billion.

Like most other retailers, Saks took some lumps during the 1990-91 recession and suffered a $64.1-million loss last year. But analysts who have studied the company are upbeat.

“They have a strong franchise, very strong name and have very smartly decided to open a chain of discount stores to sell the stuff in their stores that’s not moving,” said Linda Killian, an analyst with Renaissance Capital Corp. in Greenwich, Conn.

The retailer operates 45 Saks Fifth Avenue stores, 19 Off 5th outlet stores and the Folio catalog, all of which generated a combined $1.69 billion in sales in fiscal 1995, up from $1.42 billion in 1994.