By  on October 10, 2007

Industry deals and retail sales are in the rough.

"It's a tough retail environment, but I would tell you luxury is healthy. Whether it is going to be as robust as it has been remains to be seen," Stephen I. Sadove, chairman and chief executive officer of Saks Fifth Avenue, told 44 leading industry executives at a luncheon Friday at the Harmonie Club in Manhattan to drum up support for the World Retail Congress conference in Barcelona, April 9 to 11.

There may be "clouds on the horizon" Sadove said, citing such economic factors as the subprime lending fiasco and the credit crunch. Nevertheless, Sadove added: "I don't think it's fully affected the larger base of luxury consumers."

Sadove's cautious tone follows tepid holiday outlooks from research and trade groups. Deloitte Retail has predicted that holiday sales, excluding automobiles and gasoline, will increase between 4.5 and 5 percent from November to January, less than last year's 5.1 percent increase. And the National Retail Federation predicts holiday sales up just 4 percent to $474.5 billion, well below the 10-year average of 4.8 percent, and the slowest holiday sales growth since 2002, when sales increased a mere 1.3 percent. Last year, holiday sales rose 4.6 percent to $456.2 billion.

However, Sadove said Saks has been boosted by the "enormous amount of tourism, especially with the exchange rates the way they are," and some savvy marketing recently, including last month's launch of a big luxury shoe floor — 10022-Shoe — at the Saks Fifth Avenue flagship.

Tourists, Sadove added, are coming from many overseas markets, including the Middle East, where Saks operates licensed stores. Saks also is planning stores in China and Mexico, and looking at a few other overseas markets as well, he said.

While Sadove sounded essentially positive, other speakers expressed deeper concerns over softening retail business expected to come to light this week when September comp-store sales are reported. Then there's the wilting merger and acquisition market.

"In one word, it's tough. Deals over $500 million are basically dead," said Gilbert Harrison, chairman of Financo Inc., who, along with Sadove and Rick Darling, president of Li & Fung USA, hosted the World Retail Congress luncheon. "It's difficult to get financing," Harrison noted.Still, Harrison said he believes the industry continues to think globally, referring to retail expansion, which will be among the industry issues and challenges to be addressed at the second WRC. Currently, the WRC is taking votes to determine retailers worthy of awards in several categories like retailer of the year for overall excellence, the multichannel retailer of the year and the store with a superior marketing campaign. The award winners will be revealed at the event.

The list of confirmed WRC speakers includes ceo's Myron Ullman 3rd, J.C. Penney; Trudy Sullivan, Talbots; Joseph Gromek, Warnaco; Brendan Hoffman, Neiman Marcus Direct; Dana Telsey; Anders Dahlvig, Ikea Group, and José Luis Duran, Carrefour. Also on the roster are Alan Hassenfeld, chairman of Hasbro Inc.; Richard Baker, chairman of Lord & Taylor; Christopher Lee, senior vice president of Forever 21, and William Fung, group managing director of Li & Fung.

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