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Home › Money

Money | 02/26/2009 3:40 pm

Saks: Big Discounts Won't Last

By The Staff at wowOwow.com
© Shutterstock

Is Saks Fifth Avenue having a going-out-of-business sale? Not according to Steve Sadove, the luxury retailer’s embattled CEO.

In a conference call this week, Sadove tackled rumors that the luxury chain was teetering on the brink of bankruptcy after posting sharp quarterly losses over the holidays.

Stuck with a ton of pricey inventory at a time when even the wealthiest consumers were cutting back, Saks offered discounts of up to 70 percent last December. While the deals helped clear a few shelves, they punished margins. All told, Saks lost $98.8 million over the fourth quarter, compared to gains of $39.5 million one year earlier, with sales falling by 15 percent. The biggest losses were in women’s apparel.

But Sadove said those deals won’t last, calling big year-end markdowns a "one-time" occurrence. He said the store is looking to reduce inventory by 20 percent this year, while cutting expenditures in half to $60 million, including staff reductions. It will also boost customer service to attract more shoppers.

Despite the cuts, Saks expects losses to continue this year.

The store’s stock was trading up on Thursday.

Read more about: Bargain Shopping, Business, consumers, deals, discounts, News, prices, Recession, Saks, Sales, Shopping

3 Reader Comments (so far…) Sign In or Register to comment

Belinda Joy
Oh to live in New York! With what I would spend, I could keep their doors open for 10 more years!!!! :-) 70% off? That is what I’m talkin’ about!
By Belinda Joy on 02/26/2009 2:46 pm
Ms. Dee
Now there’s a job I could do…train sales people in good customer service.  They really ought call me.  Oh wait…Liz Smith could probably train me.
By Ms. Dee on 02/26/2009 5:57 pm
JJ GB
Have you noticed that Credit Cards have increased interest rates and lowered credit lines to even their best customers?  It doesn’t matter whether you paid your balance in full, on each monthly statement or paid 4X the minimum due before the deadline and store credit cards are as bad or worse.  JCPenney says their profits are seriously down and have no clue as to why people are paying off their balances and no longer using their cards.  I plan to discontinue use of all my credit cards except in emergencies and even though I am just one consumer, I can guarantee those of like mind will definitely have an effect on the profits of store credit cards and all credit cards, for that matter.  Those who are struggling to pay their month to month debts and credit card balances, the companies are raising their interest rates astronomically-now, tell me, if they were having trouble paying the old rates and balances, what does raising their rates do?  Credit card companies are shooting themselves in the foot and they’re too clueless to see it.  People will use cards less, buy less, spend less cash and who will suffer?  Certainly the consumer but even more so, the companies.
By JJ GB on 02/27/2009 10:29 am