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Saks Postpones Redo

NEW YORK — Saks Fifth Avenue is taking a breather on its flagship renovation, putting a major makeover of the main floor cosmetics and fragrance department on hold for at least a year.<br><br>The delay is due to a desire to keep expenses more in...

NEW YORK — Saks Fifth Avenue is taking a breather on its flagship renovation, putting a major makeover of the main floor cosmetics and fragrance department on hold for at least a year.

The delay is due to a desire to keep expenses more in line with the challenging business environment and a reluctance to be under extensive construction during the second half of this year, which would only make business more difficult.

There is still some ongoing construction at the flagship, such as a new Louis Vuitton boutique on the main floor. But as far as beauty, the beautification has been postponed. “We are going to wait on that as we weather this whole economic situation,” said Christina Johnson, Saks Fifth Avenue’s chairman and chief executive, responding to industry reports about the delay.

She insisted Saks will eventually renovate the beauty floor, possibly beginning in spring 2004, as part of the overall $100 million-plus top-to-bottom renovation of the flagship. “We would rather not put ourselves in construction at this time,” she said in a telephone interview.

Johnson also said that, by taking a break on the main floor construction, the store can better benefit from those areas recently renovated. About a year ago, a fine jewelry department opened and last December, Saks unveiled a new designer accessories concept, with “hard” shops for such brands as Bottega Veneta, Salvatore Ferragamo, Chanel, Burberry, Gucci and Yves Saint Laurent, among others, lining the perimeter of the main floor, with other brands in the middle of the floor. The Vuitton shop will be the crowning touch, opening by summer.

“We are doing extremely well in fine jewelry and all the handbag renovations,” Johnson said. “But we had to make a decision about being torn up again in the second half. We very much do not want the disruption during the third or fourth quarters.”

If the renovation timetable had been maintained, “being under construction in the third and fourth quarters would have put great pressure on us,” Johnson said, adding: “We would like to see the economy a little more buoyant” before construction resumes.

For Saks, enhancing the 650,000-square-foot flagship is crucial, particularly in light of the business lost since Sept. 11, 2001. While most Manhattan stores were affected by the tragedy, Saks in particular is trying to recover lost ground considering its high percentage of shoppers from out of town.

This story first appeared in the April 1, 2003 issue of WWD.  Subscribe Today.

The Fifth Avenue flagship normally accounts for 25 percent of the chain’s total sales of about $2.4 billion, and one industry executive estimated that Saks does $60 million a year in beauty in the Fifth Avenue location, or about 35 percent of the chain’s total beauty sales. Saks is believed to be the biggest New York specialty store in terms of beauty sales.

Facing up to the poor business climate, Saks Fifth Avenue managed itself well last year, with profits increasing fivefold to $53.1 million during the fourth quarter, and pumping up the parent corporation, Saks Inc., overall for the year. Sales at the division, however, decreased 5.9 percent to $682 million in the quarter, on a 4.1 percent comp decline.

Saks started its comprehensive flagship renovation about two years ago, but the delay of the beauty makeover won’t be the first. Officials have acknowledged that the company is running late on the entire renovation schedule.

So far, men’s sportswear on seven, Salon Z for large sizes, and men’s furnishings, as well as the fine and fashion jewelry and accessory areas, have been renovated. Also, men’s accessories were relocated to the sixth floor, next to men’s clothing.

The cosmetics floor at Saks continues to get good traffic. However, the retailer wants to lower the fixturing and sight lines to maximize the grandeur of the floor and make it easier to navigate and shop the many brands sold there, which include Prescriptives, Chanel, Yves Saint Laurent, Bobbi Brown, Guerlain and MAC.