Luxury still sells, even in tough economic times.
NEW YORK -- The economy is sputtering, but Saks Fifth Avenue isn't budging from its mission of offering "the most inviting luxury shopping experience in the world."
"We've weathered a depression and many wars, and we'll weather this one," said Christina Johnson, 51, who was named Saks' first female president and chief executive three years ago.
She believes the retailer's ambiance, customer service and wide assortment of luxury labels, particularly in designer leather goods as well as fine jewelry, cosmetics and shoes, will serve it well, even in tough times.
But Tod's $1,100 orange leather tote bags don't fly off the shelves when war erupts and stocks and bonuses tumble. Same-store sales at Saks Fifth Avenue Enterprises, which includes Saks' Off 5th discount division, slumped 4.1 percent in the most recent quarter. That was followed by a steep 11.4 percent decline in February, which was partly due to a delayed promotional event. Still, Saks managed to post operating income of $101 million last year versus a loss of $22 million the year before.
Saks is the namesake chain of Birmingham, Ala.-based Saks Inc., which also owns regional department stores, including Proffitt's, Parisian and Carson Pirie Scott.
A multi-year, $100-million renovation to Saks' flagship store on Fifth Avenue gives more space to the accessories and products that Johnson believes have significant growth potential.
In December 2001, Saks opened an expansive jewelry gallery on the main floor, and it recently added Prada, Chanel and Christian Dior to the who's who of pricey designer leather goods labels. The maze-like cosmetics and fragrances area will get a makeover next year.
"You get the feeling this is not your ordinary department store," said Candace Corlett, a retail consultant with WSL Strategic Retail. "It's a very special place to shop."
The first floor presents "a truly upscale image" and, smartly, the merchandise for sale there provides the highest gross profit margins, said investment banker Gilbert Harrison, chairman of Financo Inc., which specializes in retail.
By providing consumers with a vast array of accessories and cosmetics, shoppers are then more likely to buy apparel, "so we see those as the linchpins for the rest of our business," Johnson said recently in her 19th-floor corner office across the street from the landmark store.
When shoppers are curtailing their spending, "it's easier to buy a new scarf, a piece of costume jewelry or a handbag without buying a whole new outfit," Harrison said.
Marla Cohen came from Baltimore on Tuesday and scooped up a $235 black nylon Prada bag before she even got upstairs. "It's got the nicest selection of any department store," said Cohen, 41. "It's very fashion forward."
Johnson has updated the 79-year-old chain, introducing a corporate gift catalog last year, featuring crystal ice buckets, leather slippers and silver key rings. Salon Z, which sells women's fashions in sizes 14 to 24, has a new home in New York on the 10th floor in what used to be offices. Home furnishings and a bridal registry have been added, a department devoted to pet paraphernalia will open this month and a line of Saks chocolates will debut in the fall.
"We think the consumer wants to buy other things from us, not just apparel," Johnson said.
With 3 million transactions a year, the Manhattan store accounts for 20 percent of the chain's $2.3 billion in sales. Stores will open this year in Indianapolis, Ind., and Richmond, Va.