Fashion Fallout. Saks Shifts Gears Back Into High End. Second City Style Fashion Blog


fashion labels get makeover as chain sheds midlevel stores

Press, September 15, 2006 Chicago Tribune

NEW YORK — After struggling with the
wrong fashion formula that skewed too young, Saks Fifth Avenue wants to reclaim
its status among the well-heeled with a makeover.

The chain’s new
management is rebuilding its store-label fashions, investing in classic brands
and better tailoring its stores to meet specific markets. The shift is reflected
in a new fall ad campaign that embraces a broader approach to fashion,
highlighting more than 20 different must-haves, from fur-trimmed coats for women
to rugged sport boots for men.

Saks made a mistake of chasing young
customers with tight clothing, turning off its loyal older customers. The 1998
merger with a midlevel department store operator also proved to be the wrong
fit, resulting in disappointing earnings.

Having focused too much on its
Fifth Avenue flagship, Saks now is renovating its regional outposts to feature
open cosmetic counters and more exciting fashion displays. Saks’ Atlanta store,
renovated last year, is serving as a model.

"This is step one in a
multistep process," said Ron Frasch, vice chairman and chief merchant at Saks
Fifth Avenue Enterprises. "But we are beginning to see the light at the end of
the tunnel. You will see a good fall, and it will continue through next

Frasch now reports directly to Steve Sadove, chief executive of
parent company Saks Inc. The new management structure has been streamlined in
recent months as Saks shed its midlevel department store chains to focus on its
luxury business.

Most recently, Andrew Jennings resigned as president and
chief operating officer of Saks Fifth Avenue Enterprises, which consists of 54
Saks Fifth Avenue Stores, 50 Off 5th stores and

formerly vice chairman and chief operating officer, took on his current role in
a management shakeup in January that replaced Brad Martin, Saks’ longtime CEO.
Fred Wilson, who was chairman and CEO of Saks Fifth Avenue Enterprises for three
years, resigned after his position was eliminated.

Saks executives say a
cultural change is sweeping the company, with buyers taking bigger risks on
fashion, instead of playing it safe and fixating on inventory

Still, Saks Fifth Avenue faces heavy competition at the upper
end from Neiman Marcus Inc., whose name is synonymous with luxury shopping, and
at the lower luxury tier from Nordstrom Inc. "Saks is facing a competitive
situation where both Neiman and Nordstrom are doing extremely well," said
Michael Appel, managing director of Quest Turnaround Advisors LLC. "The issue is
how successful will [Saks] be in executing from a merchandising and service

The overhaul at Saks comes after a bumpy road punctuated by
a failed merger in 1998 and an accounting scandal that cast a cloud over its
business last year.

In March, Saks sold its Northern Department Store
Group business, which included Carson Pirie Scott stores, to Bon Ton Stores Inc.

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