At Saks Fifth Avenue, digital is strong, certain categories are selling, and third-quarter business beat expectations, though the outlook for holiday 2020 has been “tempered.”
That was part of the message from Marc Metrick, president and chief executive officer of Saks Fifth Avenue, in his quarterly letter to vendors, a copy of which was obtained by WWD.
Overall, Metrick sounded optimistic about the state of business at Saks, indicating that “growth continued in men’s driven by footwear, followed by women’s shoes, handbags, kids and fragrances across both channels.”
Regarding the gift assortment, he said, “As consumers shift their behaviors and adjust to the current environment, we’ve curated gifting offerings based on this season’s trends, such as luxury loungewear and the new must-have accessory, face masks.”
He cited “a strong response” to the recently relaunched Saks web site, adding, “Our new search functionality drove an increase in conversion with revenue up double digits through this path to purchase and customers have responded to our section of curated editorial content, ‘The Edit,’ generating high page views and with many customers shopping directly from this section.”
Nevertheless, “With COVID-19 cases increasing and the consumer looking forward to the year ahead, we may see a more tempered holiday period,” Metrick said.
“While we were pleased with the unofficial launch of the holiday shopping season, we are taking a more deliberate view of the pacing of our business, as spending patterns and the timing of holiday shopping are different than in previous years.
“Saks is not a traditional Black Friday retailer, but performance exceeded expectations over the Thanksgiving weekend, predominantly driven by digital,” Metrick said. “This was expected and is consistent with where the consumer wants to shop this season.”
Saks is a division of the privately owned Hudson’s Bay Co., which does not publicly spell out its sales and profit results, making it hard for the vendor community to get a read on how Saks and its sister divisions — Saks Off 5th and Hudson’s Bay in Canada — are performing.
Listing several Saks initiatives, Metrick wrote that digital tools enabling stylists to provide more personalized customer experiences and drive business through the pandemic were enhanced with greater data and analytics. Virtual events for top customers focus on gifting, new arrivals and exclusive products, he noted.
Metrick highlighted Saks “aspirational customers,” indicating, “As our core customer remains an important segment, business has been bolstered by our aspirational customer, who shifted spending from experiences to material goods, and has demonstrated a particular affinity for branded and logo products. The aspirational customer presents an exciting growth opportunity for us, and we’ve created a retention strategy tailored to this segment to gain their loyalty well beyond this time.” Saks differentiates its aspirational from core customers based on frequency of shopping and tiers of spending. Earlier this year, Metrick told WWD, “If you look at our top customer, they visit us twice a month. Aspirational customers can come twice a year, and obviously not spend as much.”
Metrick also said Saks expanded same-day delivery from stores in key markets: Beverly Hills; Boca Raton, Fla.; Houston, Tex.; Toronto, and Greenwich, Conn. The Fifth Avenue flagship previously launched the service.
In January, Barneys at Saks will launch on the fifth floor of the New York flagship and in a stand-alone store format in Greenwich. It’s a matter of re-branding both sites, where Saks has been selling contemporary fashion under the banner of The Collective. Barneys at Saks is expected to include new labels and some of the same labels Saks has been carrying. “Using Saks’ fashion authority, we will refresh Barneys and bring it to life in a way that is relevant for today’s luxury consumer while maintaining the brand’s essence — discovery, the unexpected and fun,” Metrick wrote. Saks has a agreement on Barneys with Authentic Brands Group, which in November 2019 bought Barneys after it went bankrupt. Barneys stores were subsequently liquidated.
Metrick noted that HBC last month closed on a $150 million term loan with Pathlight Capital LP, which provides Saks with additional liquidity. “This capital further strengthens our already solid liquidity position and gives us even more support as we make the necessary strategic investments for the future.”
Saks’ holiday campaign, “This Is How We Celebrate,” said Metrick, “permeates all of our holiday initiatives, including our holiday books, gift guides and social content.”