Saks will close “a few stores” that are underperforming and have expiring leases, according to CEO Stephen Sadove speaking at a recent investor conference. Saks will not be breaking any leases because of the high costs that process involves, he says.
Sadove didn’t specifically name any stores it will shut, but yesterday the company announced that it will close two stores in Portland, OR’s Pioneer Place Mall, which is operated by General Growth Properties.
Saks hasn’t felt the sales gains that luxury peers such as Nordstrom and others felt during the fourth quarter. Same-store sales during its Q4 fell 4.8%, and the retailer posted a loss.
But analysts actually upgraded Saks recently because its results are improving from more dismal sales. Are these store closings a case of “right sizing” that will eventually make Saks stronger?
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Re Sacs closing stores, I cannot help but wonder if this is the same CEO that decided to close 11 of the smaller stores approximately 5 years ago. In particular, they closed Saks Carmel, one of their best performing per square foot stores, and paid to terminate a recently signed 6 year lease. They wanted to change the image of the stores….good plan!!
Saks also plans to close the San Diego store at Fashion Valley. This follows the closure of the La Jolla store several years ago, leaving the retailer with no stores in affluent, growing San Diego County. This may be a viable short term strategy but in the long run could cost Saks dearly.