Saks Fifth Avenue will close by July its 33,000-square-foot store in the 225,000-square-foot Majestic Square development in Charleston, S.C., and hand over the lease to trendy fashion specialty retailer Forever 21.
This story first appeared in the May 18, 2010 issue of WWD. Subscribe Today.
It’s another sign that Saks is intent on weeding out weak units to focus resources on healthier, more productive stores, and that the L.A.-based, Korean-owned Forever 21 is eager to take over locations. Aside from the Saks unit, Forever 21 has taken over former locations of Mervyns and Gottschalks, among other retailers.
In the Nineties, Saks went on an expansion spree, and in some cases picked the wrong locations or sites that were too small. Saks earlier this year said it would close the men’s and women’s units it operates in Portland, Ore., and a unit in San Diego in July. “Every time we make a store closing, we think it through very carefully,” Stephen I. Sadove, chairman and chief executive officer of Saks Inc., told WWD. “We think through strategically the growth potential and the implications of the store closing. People and jobs are affected.”
Sadove declined to comment on whether any more stores would close this year. Long term, he said, “It’s not going to be a large number of stores….In the ordinary course of business, we evaluate the productivity, profitability and potential for each of our stores and may determine it is appropriate to close a store from time to time.”
About 60 associates work in the Charleston store. They will either be offered transfer opportunities or will receive severance packages. “Store-closing decisions are never easy,” Sadove said.
Adding to the complications are lease agreements with landlords. Saks must either wait for a lease to expire, transfer a lease to another retailer or make some other arrangement with a landlord to get out of a location. In addition to the 53 Saks Fifth Avenue stores, Saks operates 55 Off 5th outlet stores and saks.com. Saks reports first-quarter results today.