A "supertanker" steering a corrected course. A "show-me story." An "old-new" company.
That's how Stephen I. Sadove, chief executive officer of Saks Inc., characterized Saks Fifth Avenue Enterprises, a company that is undergoing major transformation. In his presentation, Sadove painted a picture of a "broad revival program" at Saks that was both specific and strategic and filled with his views on corporate culture and leadership.
Saks is a high-end specialty chain searching for a sharper identity and stronger results after years of being mired in top-heavy management, ownership changes and poor merchandise decisions, and getting beaten down by stronger competition in the upscale arena. However, same-store sales gains, management streamlining, new buying strategies, resolved charge-back and markdown issues with vendors, debt reductions, dividend payouts and asset divestitures, notably the sale of Saks Inc. department store groups, have put a positive spin on the scaled-down company and its future. The company, which operates 53 Saks Fifth Avenue stores, 50 Off-5th outlets, saks.com and Club Libby Lu, which is a small tween specialty chain, should post close to $3 billion in 2006 revenues.
In August, Saks Fifth Avenue reported 5 percent comp-store growth, followed by an 11.1 percent lift in September and a 9.2 percent gain in October. Sadove said these results suggest the beginning of a turnaround, although he did pose the question of whether the recent sales trend is a blip or the beginning of "a supertanker" that was once adrift now moving in the right direction. Time will tell.
Sadove said Saks is undergoing a "cultural transformation," and a big part of that involves changing buying procedures and having merchants work closer with store personnel and planners to tailor the merchandising to local demands of each branch. It also involves building leadership across the organization, a nine-part merchandising matrix, offering luxury items at broader price points, reviving such categories as petites and private label and strengthening ties to key suppliers.
"We have been an underperformer...and we have a ways to go," Sadove acknowledged. He said the company is targeting an 8 percent operating margin over the next three to four years, or about quadruple the current rate.
A Stella McCartney sketch of a custom dress made from protein-based silk in partnership with biotech lab Bolt Threads. The dress will be displayed at The Museum of Modern Art's upcoming design exhibition, "Items: Is Fashion Modern?"