Shanks (LSE:SKS)
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From Dec 2019 to Dec 2024

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