It could be one of the grandest post-Easter sales bargains ever, or maybe not, at one of the best-known retail names: Saks Inc., the owner of Saks Fifth Avenue. But bring a fat wallet if you’d like to go shopping. Perhaps as much as $2.8 billion should be enough.

Last month, there were published reports that Saks, headquartered in Birmingham, Ala., might sell or spin off its middle-market department store group to focus on the upscale customer or the luxury market. All told, this group – 233 stores with combined sales of $3.7 billion with paltry profit margins – consists mostly of regional chains concentrated in the Southeast and Midwest, including such names as Proffitt’s, Carson Pirie Scott, Younkers, Parisian, and the Boston Store.

Saks has consistently refused to comment on the reports.

Now, though, there’s fresh speculation making the rounds in both retail and apparel manufacturing circles. In brief, the company’s chief executive and chairman, Brad Martin, is said to be amenable to a possible buyout of all of the company’s 342 stores in 40 states that posted sales of $6.4 billion in 2004, according to sources with board and management contacts. Included are 57 Saks stores and 52 Saks Off 5th discount stores with aggregate sales of $2.7 billion.

As of the latest proxy statement, Mr. Martin, who is 53 and recently became a father for the third time through his second marriage, owns 2.64% of Saks’ 139.7 million shares outstanding. Mr. Martin couldn’t be reached for comment. A Saks spokeswoman, Julia Bentley, said, “We don’t comment on speculation.” In the past, though, Mr. Martin hasn’t ruled out the sale of at least part of Saks’ assets.

Meanwhile, a money manager at one institutional holder of Saks has been telling some Wall Street buddies that a board member had very recently suggested to him that a transaction of some sort at Saks should come sooner than later.

In a takeover, assuming that’s a real possibility and not just idle speculation, Saks could fetch between $18 and $22 a share, or roughly $2.8 billion, according to an estimate from one investment banking source. The stock closed on Thursday at $15.60.

Speculation of a Saks buyout comes on the heels of a flurry of merger and acquisition activity in the retail industry, most notably a couple of recent $11 billion deals – Kmart’s acquisition of Sears and Federated Department Stores’s purchase of May Department Stores.

Meanwhile, Saks shares, despite the reported prospects of a significant transaction, have come under selling pressure. This stems from the company’s plans to restate its financial results from 1999 through the third quarter of 2004 because of accounting errors related to its previously recorded operating leases, as well as an informal inquiry by the Securities and Exchange Commission into the alleged improper collection of $21.5 million from vendors. Saks has said it plans to reimburse or otherwise compensate the affected vendors and will take appropriate personnel actions following the investigation.

As far as its bottom line goes, Saks is hardly a world-beater, as seen by its performance in the last year, during which income skidded to $60.9 million, or $0.42 a share, from $80 million, or $0.56 a share in 2003.

Whether any kind of a sale at Saks materializes is anybody’s guess. But some investment professionals believe caution is needed, noting that rising interest rates and the big increase in oil prices (leading to higher fuel costs) add up to a slowing economy and tougher times ahead for retail stocks.

***

Plenty of energy: You hear it everywhere. Energy stocks are over owned and over loved. It’s one of the chief arguments of a number of investment strategists who argue that it’s time to scale back on the sector after a blistering 90%-plus gain since the end of 2002.

Not so, contends a UBS analyst, James Stone, who insists there’s “still room to dine on energy stocks.” Challenging the over owned theory, the analyst notes that an extensive analysis of the top 100 institutions indicates that while energy holdings and weightings are up in the last two to three years, the weightings have remained very close to the S&P 500 benchmark and are actually down since 2002 on a relative basis.

At the end of last year, the S&P 500 energy weighting was 7.2%, versus about 8.7% currently. Energy earnings continue to rise relative to the rest of the index and, for 2004, stood at 10% of the total, up from 8% a year ago. Estimates indicate energy earnings should rise to 11% of the total in 2005, which Mr. Stone believes could spur increased ownership. Given the stronger earnings growth outlook for oil services relative to the market, he thinks investors should continue to add such stocks to their holdings. His top picks are Halliburton, BJ Services, ENSCO, Nabors, and Noble.