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Saks, Incorporated (SKS) Buzz Stock of the Day

|Includes: Saks Incorporated (SKS)

Shares of luxury goods provider Saks Incorporated (NYSE: SKS) skyrocketed Tuesday as acquisition rumors gained momentum, rallying as much as 34.00% at the open  to secure an intraday high of $8.85. Saks shares are currently hovering at $8.13 in afternoon trading, a 23.2 percent increase from yesterday’s close. Before Tuesday, Saks's stock had risen less than 1% this year, outpacing the S&P Retail Index's 3.5% decline.

Britain’s tabloid Daily Mail newspaper, which isn’t citing named sources, reports that a group of American and British private-equity houses have been reviewing Saks for months and are looking to make an offer for the company for $11 a share, or $1.7 billion. Saks spokeswoman Julia Bentley said the company doesn't comment on rumors or speculation.

There are numerous attributes that might make Saks attractive to potential buyers. The luxury-fashion retailer has seen its earnings improve recently because of cost-cutting and higher demand for high-end products. Luxury goods sales have held up relatively well throughout the downturn, partly because unemployment is significantly lower for people with white-collar jobs, at around 5%, compared with the national 9.5% rate.

Under Chief Executive Steve Sadove, Saks has narrowed its losses and improved its sales after demand faltered in the wake of the financial-sector meltdown in 2008 that led the company to offer sharp discounts.  To bolster company financials, Saks issued $120 million in May 2009 in convertible debt and in October completed a $100 million common stock offering to help it reduce borrowings on its revolving line.