The fine jeweler, a subsidiary of Compagnie Financière Richemont SA, on Wednesday filed suit in local New York court against Saks, part of Hudson’s Bay Co., claiming that the retailer’s $250 million remodel and a related attempt to end years early a five-year lease for a retail space within its Manhattan flagship is damaging its business. Cartier is seeking at least $40 million in damages.
“Saks’ actions were undertaken in bad faith for the purpose of harassing Cartier and interfering with its ability to operate in the Cartier department in the Cartier location and constitute a breach of the covenant of good faith and fair dealing,” Cartier wrote in its complaint.
Meanwhile, a Saks spokesman declined to comment specifically on pending litigation, per company policy. Nevertheless the retailer’s major efforts to overhaul the layout of the flagship, naturally including the movement of vendors, are clear.
“We have reconceptualized the model of our Fifth Avenue flagship in a way that will revolutionize luxury shopping,” the spokesman said. “In partnership with our many existing and new vendors, our grand renovation will deliver a one-of-a-kind experience to our customers through elevated and dominant category presentations in our reimagined store.”
Saks has previously done major floor-wide changes aimed at enhancing the shopper experience by providing greater vertical transportation, easier sight lines and a less harried environment, while creating more dominant category presentations, such as it did eleven years ago with the launch of 10022-Shoe format on the eighth floor. The recasting of the footwear business enabled Saks to bring in several designer brands it lacked previously, including Louis Vuitton and Manolo Blahnik, and formulate new marketing campaigns for a sharper focus on the business. Saks even made one of its elevators an express to eight to speed traffic to the floor. Shoes had been split on the second and third floors and vendors had been worried than moving shoes to eight would hurt business. But the 10022-Shoe floor evolved into one of the busiest businesses in the store, and the concept was rolled out to other locations.
Saks hopes to have similar success with fine jewelry, which is being relocated to the lower level and branded as “The Vault.” The Vault is expected to open sometime next year. An escalator connecting the main floor to The Vault and the main floor to beauty on two is being constructed. Beauty had long been on the ground floor, but the reception from brands and customers, both given more space and privacy, is said to be positive.
Also as part of the flagship overhaul, which officials have characterized as a “re-imagination and reinvention,” the main floor will be devoted to leather goods and accessories. It’s currently under construction.
For Cartier, however, it seems that the brand wants placement on the ground floor or bust. The jeweler said in October 2016 it renewed a five-year lease for its “specifically selected” location within the Saks flagship, and noted the space was chosen and substantially invested in “due to its nearly unmatched visibility (to maximize brand exposure) and customer foot traffic, security and logistical considerations, as well as the overall shopping experience of Cartier’s customers.”
However, issues purportedly started cropping up this year as the Saks remodel got underway. Despite “repeatedly and consistently” being assured by Saks executives that the construction efforts would not affect Cartier’s lease or its business, that’s allegedly what has happened.
In addition to the “substantial challenges” of dust and construction debris that Cartier claims threatened the health of its workers and required “significant and continuous efforts to clean” the jeweler’s location and its mainly glass displays, the construction allegedly took a toll on shopper traffic, affecting sales and causing “significant damages to Cartier,” according to the complaint.
Nevertheless, Cartier apparently did not want to leave its current Saks location for what is expected to be a new, more cohesive, private and expanded floor for fine jewelry on the lower level within Saks. By refusing to agree to Saks plans, it seems the retailer resorted in August to a letter of termination “demanding” that Cartier vacate its current space by Oct. 13, the suit alleges.
Although Cartier does not detail what, if any, conversations took place between the onset of construction and the termination letter, it points to the typical language of the lease agreement, which purportedly shows the termination letter is “defective on its face.” In addition to the tens of millions in damages, Cartier is asking the court to find the lease termination letter “null, void and of no force or effect.”
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