NEW YORK -- Saks Fifth Avenue fired a shot across the bow of the West Coast retail landscape Monday, when it announced it had acquired four former I. Magnin units.
The stores are in Beverly Hills, Carmel and San Diego, Calif., and Phoenix. I. Magnin is in the process of being shut down by its parent, Federated Department Stores, as a result of Federated's merger with R.H. Macy & Co., as reported.
As part of a move to increase its profile in California and Phoenix, Saks said it will also renovate and expand its existing San Francisco store.
The moves will increase Saks' presence in the West Coast to 765,000 square feet, a 20 percent gain.
Ironically, some retail experts have been anticipating a downsizing by Saks, which, they say, has been under pressure to improve its bottom line. Monday's announcement is a sign of Saks's confidence in its ability to strengthen its Southwest and West Coast franchise and a show of support from its parent Investcorp.
According to Philip Miller, chairman and chief executive officer of Saks Fifth Avenue, the additional space should add $100 million to the chain's volume.
While Miller declined to say how much Saks paid for the Magnin's units, he said the company will invest $60 million to $70 million on renovations and expansions.
The 100,000-square-foot former I. Magnin unit in Beverly Hills is across the street from a 160,000-square-foot Saks store. The company said it will use the I. Magnin location to create a Men's Store that will also house selected women's apparel, children's wear, bridal salon, gifts, a restaurant and beauty salon.
With a 125,000-square-foot Barneys New York on Wilshire Boulevard and a 240,000-square-foot Bloomingdale's scheduled to arrive in 1997, Saks' Beverly Hills expansion should touch off a heated upscale retail battle.
"Saks is saying, 'We're facing new competition from Barneys and Bloomingdale's. We've been there for a long time and we're not going to allow ourselves to take a second position to those stores,"' said Arnold Aronson, a partner in Levy Kerson Aronson & Assoc., retail management and executive search consultants, and a former ceo of Saks Fifth Avenue.
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