After two years of heady growth in volume, product choices, customers and services, Saks.com has tempered its outlook and adopted a cautious approach to 2023.
“What we’re starting to see is a deceleration of the aberrational growth we experienced in the last few years, and I think we have to prepare ourselves for that and be very deliberate about our decision making,” Marc Metrick, the chief executive officer of Saks.com, told WWD.
“I’m certainly expecting 2023 to be much more of a normalized year from what we’ve been seeing the last few years, and a challenging environment for everybody.”
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While consumers are slowing their discretionary spending, Saks this year is also up against difficult comparisons to past gains. “It’s tough when you have big numbers you’re lapping,” Metrick said.
“Over the last couple of years, you saw a lot of people buying a lot of footwear and handbags. Those businesses are going to be a little bit softer,” said Metrick. “On the other side of it, as people continue to come out, continue to return to the office, continue to travel, you’re going to see some sportswear and eveningwear still be stronger. There’s going to be, as there always is in our business, pockets of strength and pockets of a little bit of softness.
“When you think about this year and where we’re at, it’s all about focusing on efficiency and scale. So that’s going to be a big focus for us and always going to be a big focus for us.”
While scaling up, furthering a marketplace component on Saks.com, adding brands and categories to the assortment, and attracting more customers, Metrick was adamant that the initiatives don’t imply any kind of trading down. “We remain steadfastly committed to luxury,” he told WWD. “And we really want to be that luxury destination for people who want to enjoy luxury. That’s who we are.”
About 650 luxury brands were added to the assortment in fiscal 2022, with nearly 200 coming online in the fourth quarter alone. Saks.com’s marketplace component added more than 90 luxury brands across multiple categories. Brands on the marketplace control their products and pricing, while Saks remains “asset light and maintains its luxury fashion point of view to provide customers with more choice in merchandise,” according to Metrick.
On Thursday, Metrick sent his quarterly letter to brand partners updating how Saks.com and the Saks Fifth Avenue stores performed and enhanced their businesses with new offerings, services and programs. Only percentages on gross merchandise value were provided. As private companies, Saks.com and the Saks Fifth Avenue stores don’t publicly share any top- or bottom-line dollar figures, making it difficult for outsiders to get a precise read on performances.
Metrick wrote that for Saks.com, gross merchandise value (GMV) for the fourth quarter of 2022 was up 11 percent “on top of a strong fourth quarter of 2021, driven by increased traffic, customer retention and new customer growth.” Versus the fourth quarter of 2019, GMV increased by 119 percent. For all of 2022, Saks’ GMV was up 28 percent compared to 2021 and up 121 percent compared to 2019.
For SFA Stores, GMV declined by 8 percent in the fourth quarter of 2022 versus “a robust” increase in the fourth quarter of 2021. Compared to the fourth quarter of 2019, GMV increased by 12 percent. For all of 2022, GMV was flat compared to 2021 and increased 20 percent from 2019.
For Saks.com and the Saks stores combined, GMV was down 2 percent last quarter compared to the “strong” fourth quarter in 2021. But GMV rose 37 percent last quarter compared to the same period in 2019. For all of 2022, GMV was up 8 percent compared to 2021 and up 43 percent compared to 2019.
Top-performing categories online in Q4 were dresses, eveningwear and women’s contemporary ready-to-wear. Top-performing categories across Saks stores were handbags, women’s apparel and men’s, and top-performing markets were New York and Florida. Sales volume at the New York flagship in fiscal 2022 outpaced pre-pandemic levels, Metrick wrote.
Asked about the flagship, which took a big hit during the pandemic, Metrick told WWD, “It’s actually doing a bit better. So we’re starting to see that store come around.”
“We are more confident than ever that our strategy is working,” Metrick wrote. “In fact, since becoming an e-commerce company almost two years ago, we’ve acquired nearly three million new customers online — close to five times the number of new customers who shopped on Saks.com in 2019 — and grown to become the largest online luxury pure-play in the U.S,” though Metrick doesn’t specify the size of it and won’t comment on profitability. Sources, however, say Saks.com is approaching $2 billion in annual volume.
“Our ecosystem approach is working and more customers than ever before are shopping with us both online and in store, with cross-channel customers increasing by approximately 40 percent in fiscal 2022 compared to fiscal 2019,” Metrick said.
In March 2021, the Saks Fifth Avenue store fleet and The Saks e-commerce operation were split into separate companies by the parent company, the Hudson Bay Co. Insight Partners, a venture capital and private equity firm, made a $500 million minority equity investment in the Saks e-commerce business at the time. The separation sparked speculation that Saks.com is being positioned for a possible initial public offering, though considering the current economic headwinds and the roller-coaster ride that the stock market has been on for awhile, that isn’t likely to happen anytime soon. As stand-alone companies, Saks Fifth Avenue’s e-commerce business is now known as simply Saks. The 39-store Saks Fifth Avenue fleet is known as SFA.
Metrick cited other highlights of last year and the 2022 holiday season, among them:
- Separate technology and operations teams were created for efficiencies and to accelerate growth.
- Ninety-five percent of customer emails now feature personalized content developed through data-driven insights.
- A Saks Man program, patterned after the Saks Social Club women’s brand ambassador program, was introduced, where some 30 influential guys in sports, entertainment, business and other sectors promote the store’s marketing campaigns and product launches, create custom content for the digital channels, and host virtual and in-person events.
- A new menswear floor at the Fifth Avenue flagship was opened.
- Through its partnership with American Express Platinum and Centurion, Saks hosted a concert with Kacey Musgraves in Los Angeles for Platinum cardholders, and produced nearly 40 virtual events through its interactive live commerce platform, Saks Live.
- An estimated 400,000 visitors saw Saks’ holiday windows and light show on Fifth Avenue and 4 million eyed the holiday campaign across Saks’ social media channels.