Here's a good rule of thumb -- if a big part of the positive thesis around a company is that it might get sold to someone who can actually run it well, run in the opposite direction.

I took a fair bit of guff last year when I cast doubts on Saks' (NYSE:SKS) prospects, but here we are a year later, and the stock is almost where it began, minus a sizable one-time dividend. Not exactly what I'd call a rip-roaring retail success story -- especially when you could have had Nordstrom (NYSE:JWN) or Coach (NYSE:COH).

But Saks is still a story in progress. It's shedding a lot of its department-store assets -- it sold its Northern Division Department Store Group to Bon-Ton (NASDAQ:BONT) for a fair chunk of change recently and paid out a $4 special dividend. And apparently, management is still considering a sale of the Parisian specialty department store business as well -- a move that would clearly bring more cash into the till, something that the existing operations haven't been doing so well.

As you might imagine in the wake of a big asset sale, results for this quarter were all kinds of screwed up. Reported revenue was down 33%, but that's a pretty irrelevant number -- the 1.9% same-store-sales drop is more important, and it's not exactly good. Likewise on the margins -- the timing of the sale made an impact that shouldn't be repeated, but it's still hard to call results good when the flagship Saks Fifth Avenue segment saw its operating income drop.

I'm not sure whether the company plans to sell all of itself or retrench around the Saks brand, but let's just assume that the latter is what happens. The company will definitely have its work cut out getting back into the same league as Nordstrom. Then again, short of lightning strikes or locust plagues, I'm not sure there are too many more bad things that can happen to this company.

Valuing turnaround candidates requires a bit more art than science, but I don't see these shares as horribly expensive. Then again, I'm not what you'd call a big believer in the story, either. For those who want to believe, at least keep an eye on those comp sales and margin trends -- if the company can do more with less, a recovery is a real possibility. But beware of doing less with less.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).