By  on November 16, 2006

NEW ORLEANS — Looted and ravaged by fire, the Saks Fifth Avenue store here was a dark, dank shell when general manager Carolyn Elder assessed the damage after Hurricane Katrina.

That moment marked an end — as well as a beginning.

Today, about 14 months later, Saks is to become the first — and only — department store to reopen downtown. Executives predict customers will return, even though most people believe achieving normality in New Orleans will take many years.

"I never lost faith that we could make a comeback," Elder said. "But I have to admit I did take a step back and take a deep breath when I realized the extent of the challenge that faced us."

She initially contemplated that challenge from her kitchen pantry in the Uptown neighborhood, one of the few areas that sustained minimal damage. In the makeshift office, equipped with cell phone, BlackBerry and a computer, Elder was the go-to person in the effort to resurrect the 110,000-square-foot store.

In a city with nonexistent resources, Saks' trump card was a Jackson, Miss.-based construction company used by the retailer that dispatched a team of workers and supervisors who sometimes worked seven days a week during the various demolition and construction phases, Elder said. At the peak of construction, as many as 175 workers swarmed the building, including teams of 25 architects and engineers and 20 store planners and designers.

Saks usually allots about two years for such an extensive project. The New Orleans store had an accelerated timetable for completion. Executives declined to reveal the cost.

"It's worth the investment," said Saks chairman and chief executive officer Stephen Sadove. "Rebuilding the New Orleans store from scratch was as much a business decision as it was our vote of confidence in the city. It has been a long process, but we were committed."

With the two other downtown department stores, Macy's and Lord & Taylor, permanently closed, the rebirth of Saks has taken on heightened importance to the city, where more than 80 percent of homes and businesses were flooded and the population is now estimated at 197,000 compared with 450,000 before the hurricane."Saks' impact on New Orleans' recovery is crucial to demonstrating to the outside world that the city is resuming its vibrancy," said Darryl Berger, co-owner of The Shops at Canal Place, a 200,000-square-foot mall that Saks anchors and where BCBG, Banana Republic and Adrianne Vittadini are among the tenants.

Many merchants, some of whom reported 10 to 30 percent monthly sales increases in Saks' absence, are bracing for the fallout from the store's return. On Magazine Street, a main shopping thoroughfare, Mimi Bowen, owner of the high-end boutique Mimi, is prepared for the "giant sucking noise" that will represent the drop in her sales. "I'm worried, but Saks' reopening is far more significant to the future of the city than my concerns about my store," she said.

The emphasis of the new Saks will remain women's ready-to-wear, which has represented 60 percent of sales. The second floor is filled with boutiques averaging 800 square feet each and earmarked for newcomers such as Chanel, Oscar de la Renta, Chloé, Etro and Akris. They join perennial Saks boutiques Carolina Herrera, Prada, Armani Collezioni, Escada, Dolce & Gabbana, Moschino, Piazza Sempione, Dusan and TSE. Hermès opted to discontinue its 250-square-foot presence.

Designer boutiques share the store's second level with the contemporary category that includes vendors such as Tahari, Theory, Nanette Lepore, Juicy Couture and Twisted Heart, as well as intimate apparel and shoes.

The interior design shows off brands amid elegant accents. Walls of silk paper and others made of frosted glass face partitions of glossy red-painted panels. Mother-of-pearl mosaic tiles offset porcelain floors. Sculpted three-level ceilings with rounded moldings anchor spotlights and dramatic mobilelike chandeliers.

"We had a handsome building before, but now we have a look that is totally modern luxury," Elder said.

And 19 paintings from New Orleans artists create whimsical focal points. Saks' visual designers uncovered a wealth of contemporary art in the city's galleries.

"They were blown away by the range of talent in New Orleans, where the art is a fraction of the price compared to either coast," Elder said.

The rebuilding took firm shape in February, when Saks officials convened in New Orleans. Elder planned a day of meetings with representatives of the city's real estate, tourist, convention and financial industries. The itinerary also included a tour of the city during which the visitors fell silent as they viewed the devastation.If Saks executives thought reopening was a risky venture, Elder sought to put that notion to rest by overlaying the map of the flooded areas with the map that showed the predominance of the New Orleans customers' zip codes. She concluded that 20 percent of Saks' customer base had been severely affected by Katrina.

"That was a huge visual impression that helped balance the impression created by national news that the city was in worse shape than it was," Elder recalled.

It was a pivotal moment for Saks in New Orleans. "Even though we all thought we would come back, it was really at that point when everyone said, ‘Okay, let's do come back, and let's come back in November,'" she said.

As construction momentum gathered steam, Elder turned to focus on the whereabouts of Saks' customers and the 190-member staff, whose eventual return to the city was key. Customer service fielded hundreds of calls from displaced clientele and then marshaled resources to stay in touch via Internet and phone. The retailer tracked its customers through their credit card purchases as they shopped Saks stores in other locations.

"It showed us that our customers were loyal and continuing to spend at other Saks stores and on the Internet,'' Elder said. "It was a solid — and encouraging — pattern of success."

Employees were paid full salaries for four months and offered jobs at other Saks stores. With coordination from the Saks human resources department, 60 associates were relocated for jobs in stores from Palm Beach, Fla., to Beverly Hills. Another 60 employees, tied to the region for personal reasons, took whatever temporary employment they could find. Still others, like Gabe Nassar, became an integral part of the recovery effort.

Nassar, who had been the eveningwear department manager, was drafted to put on a hard hat and served as assistant to the construction superintendent. As the store relaunches with 115 of its original employees and about 70 new hires, Nassar will be the department manager of contemporary and modern sportswear.

"He's just one of those flexible, amiable guys with a positive attitude and who volunteers above and beyond," Elder said.While the city's recovery poses daunting problems, Saks officials are optimistic, pointing to a regional customer base that extends in a 200-mile radius from New Orleans to cities such as Baton Rouge, La., and Mobile, Ala., accounting for 60 percent of sales.

Convention and visitor traffic generates the remaining 40 percent of sales and is making a slow return. In October and November, conventions attracted an estimated 184,000 people, tourism officials said. Although down from a comparable period in 2004 when 356,000 conventioneers attended meetings, officials say the number is encouraging.

Across the street from Saks, Harrah's Casino has reported record revenues each month over the past six months, and a few blocks away, cruise ships have returned to the port of New Orleans carrying thousands of visitors.

Before shutting down, Saks' sales volume in New Orleans had earned it a consistent number 10 ranking within the 55-store system. With $500 sales per square foot, it typically posted 5 to 7 percent annual sales increases.

Although a fixture in the market for 23 years, Saks may not regain that momentum for two to three years. "It's a conservative estimate and could accelerate depending on how the various departments perform," Elder said.

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