J.P. Morgan Reiterates Overweight Rating on Saks on Redemption Notice Announcement

In a report published Friday, J.P. Morgan analyst Matthew R. Boss reiterated an Overweight rating on Saks

. In the report, Boss noted, “This morning, SKS announced that it is giving redemption notice to the holders of its $230M 2.0% convertible senior notes due March 2024 at 100.2% of the principal amount. More/less EPS neutral in FY13 (lower share count offset by higher interest exp), we see this as a positive from a capital allocation/share count dynamic longer-term (FY13 share count reduced ~10%) particularly with management accelerating its use of capital toward buybacks (largest use of capital in 5 years in FY12). While we see near-term constraints in 1H13 (front-end loaded SG&A / larger picture top-line concerns), we think today's announcement is a vote of confidence for 2H13 and FY14's underlying prospects (Omni-Channel, luxury demand, wealth effect).” Saks closed on Thursday at $11.67.