Saks Has New Approach To Cope With Recession, Retain Cache
September 09 2009 - 2:45PM
Dow Jones News
Saks Inc. (SKS) is seeing a bit more predictability among
consumers as it tracks a new course that includes more specialized
offerings and taking a more local approach to selling.
The luxury retailer is doing more with private-label brands,
signing exclusive deals with suppliers and having "more unique
product made for us," said Chief Executive Stephen Sadove. "That, I
think, is changing the nature of what we're selling."
Saks is also altering the way it sells merchandise, developing
local business plans for stores and marketing at local levels.
Sadove was speaking at a Goldman Sachs retail conference on
Wednesday in which he and other executives said they are seeing
more predictability in the way consumers buy, which helps their
planning, although not much overall improvement in demand.
"Things aren't getting a lot worse, but I also don't see them
having gotten a lot better either," Sadove said.
Saks caters to an upper-end customer whose wealth is tied to a
large degree on assets like stocks and real estate. While the stock
market has risen considerably from the end of last year, there is
still uncertainty, Sadove said. "It's about confidence and there is
a little bit of a malaise" caused by concern about whether the
stock market's gains can stick.
Saks, which has long lead times for making purchases, making it
harder to order against anticipated demand, is taking as few
chances as it can and buying about 20% less inventory than it did a
year ago. The retailer is also offering lower-cost items among the
brands it carries.
But it will take time for Saks and many other hard-hit retailers
to get their financial performance back on track. Last month Saks
posted a second-quarter loss of $54.5 million, or 39 cents a share,
as net sales fell 15% to $561.7 million, even with considerable
merchandise markdowns.
Fellow luxury marketer Neiman Marcus on Tuesday said its fiscal
fourth-quarter loss widened as the company took hits from a large
impairment charge and weakness in the broader retail
environment.
"I think over time we ought to be able to get our gross margins
at or above the levels that we saw as you go back into the 2007
type of timeframe," Sadove said.
Sadove was alluding to a period before the recession and deep
discounting began in earnest.
Saks shares were recently up 13 cents, or 2.11% to $6.31.
-By Karen Talley, Dow Jones Newswires; 212-416-2196;
karen.talley@dowjones.com