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Saks Fifth Avenue Experiences Major Loss and Closes Bridal Shops

Fab Flash: Saks Fifth Avenue's Dismal Downturn

Saks Fifth Avenue is one of our favorite online stores, but it's been experiencing major economic woes.

In November, the luxury retailer reported “widespread weakness” with a net loss of $42.8 million. Today, the luxury retailer announced it will be closing shop on all but two of its bridal salons. The two bridal salons left standing will be the New York flagship and the Beverly Hills store. All other locations are set to close sometime next year. Saks will start marking down its bridal collections — which includes designs from the likes of Carolina Herrera, Jenny Packham, Monique Lhuillier , and Oscar de la Renta — in January — future brides take note!

On the flip side, Neiman Marcus reported a $12.9 million profit this quarter. Both retailers seem similar so we wonder why one's doing much better than the other. Care to enlighten us?

Source

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mlen mlen 7 years
well thanks for correcting me- i'm gonna have to check out the sales at saks i guess!!!
Brielle Brielle 7 years
they buyout helping their finances was just speculation on my part, thinking that maybe they dealt with their major money-losing departments years before other companies were forced to. However, the Neiman Marcus group did own majority shares in kate spade and other companies. they sold the kate spade shares to liz claiborne. thus i again guessed that taking money out of stocks before they started bleeding money helped their business. this is a quote from an article regarding the issue: "In 1998 the Group acquired controlling interest in the company that makes Laura Mercier cosmetics. The next year, they purchased more than 50 percent of Kate Spade, manufacturer of luxury shoes and handbags." and here is a link to an annual report from NM in 2000 listing Kate Spade as a subsidiary. http://www.secinfo.com/dpZAs.59.4.htm#1stPage
Brielle Brielle 7 years
they buyout helping their finances was just speculation on my part, thinking that maybe they dealt with their major money-losing departments years before other companies were forced to.However, the Neiman Marcus group did own majority shares in kate spade and other companies. they sold the kate spade shares to liz claiborne. thus i again guessed that taking money out of stocks before they started bleeding money helped their business. this is a quote from an article regarding the issue:"In 1998 the Group acquired controlling interest in the company that makes Laura Mercier cosmetics. The next year, they purchased more than 50 percent of Kate Spade, manufacturer of luxury shoes and handbags."and here is a link to an annual report from NM in 2000 listing Kate Spade as a subsidiary. http://www.secinfo.com/dpZAs.59.4.htm#1stPage
pigalle74 pigalle74 7 years
no no, the LBO is not the reason why Neiman is doing better than Saks. Saks always had higher costs than Neiman because of those other lines such as bridal shops- hence the closing. LBO means more debt which means more interest expense which hampers their cash flow. Whoever said NM sold off their product rights is absolutely wrong- retailers do not own any products- they own real state and that's why there have been lots of interest from private equity investors- can I say Mervyn where private equity people bought the company and sold off all their real estate and left with no assets at all- so they're now bankrupt and liquidating. Many of companies that are bankrupt are private owned- because of heavy debt burden and could not service their debt. BTW, Liz Clairborne owns Kate Spade and NM has never owned them. It's all about cost control when your top line suffers. NM does that better because their operation is more focused than SAKS's. Also it has nothing to do with NM being headquartered in Dallas. Neiman Marcus ran a huge promotion last quarter so their top line did better than saks, but their profit margin suffered because of that.
Asche Asche 7 years
And who said girls who like fashion are dumb??
Glittersniffer Glittersniffer 7 years
We've got an Off 5th in our outlet mall, and I'm just waiting for it to close. There is NEVER anyone in there. Makes it great for the sales hunters that have a little spare coin (me, yay), but can't be good for the business itself. Seems to me that Neiman's is doing better than Saks because Neimans caters, IMHO based on who I see there, to the "pinched but not hurting" class of shopper. Yeah, the VP might've not gotten a bonus this year, but he still needs VP suits, so he'll go to NM for them. Saks seems to cater more to a younger set that might not be so well cushioned against losing out on a bonus or such like.
Glittersniffer Glittersniffer 7 years
We've got an Off 5th in our outlet mall, and I'm just waiting for it to close. There is NEVER anyone in there. Makes it great for the sales hunters that have a little spare coin (me, yay), but can't be good for the business itself. Seems to me that Neiman's is doing better than Saks because Neimans caters, IMHO based on who I see there, to the "pinched but not hurting" class of shopper. Yeah, the VP might've not gotten a bonus this year, but he still needs VP suits, so he'll go to NM for them. Saks seems to cater more to a younger set that might not be so well cushioned against losing out on a bonus or such like.
laurielou laurielou 7 years
It has nothing to do with its headquarters being in Dallas. If all of its stores were in Dallas that would be a relevant argument, but the company has 35 stores in 20 states and is spread around as much as Saks. Bella is right, its 2008 profit is 85% lower than last year's profit. So Neiman's balance sheet isn't all that rosey, but I guess rosier than Saks.
lizzylu49 lizzylu49 7 years
I'm surprised. I'd think it would be the other way around. I like Saks better for the reason that morgs mentioned: the AMEX-only thing is totally ridiculous.
lizzylu49 lizzylu49 7 years
I'm surprised. I'd think it would be the other way around. I like Saks better for the reason that morgs mentioned: the AMEX-only thing is totally ridiculous.
vnl2383 vnl2383 7 years
I agree with fleurfairy - it has everything to do with Neiman's being a Texas-based business. While they may have lost money since last year, Texas is still considerably better-insulated from economic downturns than than many other parts of the country. And a true Neiman's girl works her budget. I'll be there tomorrow. Woot Woot!!! Or should I say Merry Christmas Y'all?
lady_jade lady_jade 7 years
great job breakin it down ladies! My sister's getting married next year-we'll be stalking her local saks looking for deals. that is all. :)
lady_jade lady_jade 7 years
great job breakin it down ladies! My sister's getting married next year-we'll be stalking her local saks looking for deals. that is all. :)
Asche Asche 7 years
Overall I like Neiman Marcus more because I like their marketing campaigns. However there are things about Saks that I prefer. For instance, their sales and the fact that I can pay with something other than AMEX or cash!
Beauty Beauty 7 years
Neiman Marcus had a profit, but the numbers behind it tell the whole story. The numbers have plunged compared to the same time in '07, with lower profit margins, so my guess is that they're not really celebrating in Texas.
Shop_Oholic Shop_Oholic 7 years
I like Saks better than Neiman...don't get why they are doing better!!!
Asche Asche 7 years
Not turning a profit on a property is far different than having your home forclosed on because you a) speculated on your mortgage when interest rates were set WAY too low post-9/11 and b) was granted a mortgage refinance even though you had zero collateral to begin with (that was very typical post-9/11). So yes, everyone is feeling the crisis. I'm breaking even on my real estate instead of turning a profit, for instance. But I wouldn't for a second compare my "investment woes" to that of the American middle class. In America the middle class is disappearing while the rich are getting richer because, let's face it: there is a TON of money to be made short-selling in such a volatile market.
Asche Asche 7 years
Not turning a profit on a property is far different than having your home forclosed on because you a) speculated on your mortgage when interest rates were set WAY too low post-9/11 and b) was granted a mortgage refinance even though you had zero collateral to begin with (that was very typical post-9/11). So yes, everyone is feeling the crisis. I'm breaking even on my real estate instead of turning a profit, for instance. But I wouldn't for a second compare my "investment woes" to that of the American middle class. In America the middle class is disappearing while the rich are getting richer because, let's face it: there is a TON of money to be made short-selling in such a volatile market.
Brielle Brielle 7 years
I agree that Saks has better sales, but I think the reason NM is doing better is that in 2005 they did a leverage buyout and sold the company to 2 private companies, and they also sold off a bunch of their majority-shares in a lot of their products (chiefly kate spade llc) so i think a lot had to do with their diversifying investments before the economy got really bad. and just a side note, its not strictly the middle class who are suffering. anyone who has money in real estate, for example, probably hasn't seen a profit this year. it really depends more on where the money was coming from, not how much of it you had.
Brielle Brielle 7 years
I agree that Saks has better sales, but I think the reason NM is doing better is that in 2005 they did a leverage buyout and sold the company to 2 private companies, and they also sold off a bunch of their majority-shares in a lot of their products (chiefly kate spade llc) so i think a lot had to do with their diversifying investments before the economy got really bad.and just a side note, its not strictly the middle class who are suffering. anyone who has money in real estate, for example, probably hasn't seen a profit this year. it really depends more on where the money was coming from, not how much of it you had.
fleurfairy fleurfairy 7 years
Neiman's does a better job of marketing I think. They also have fewer stores so that's wasting less money on operating. And the headquarters is in Dallas, a very wealthy city.
Asche Asche 7 years
WHAT are you talking about Megin? Saks is always cheaper! Especially when it comes to sales. I havn't paid full price for a pair of Choos or Louboutins in years. Last season I bought a pair of Choo flats for $120...at that time they cost $350 at NM! And furthermore, anyone who was buying Marc Jacobs collection pre-struggling economy probably still is. It's the middle class that is really feeling the recession, not so much the rich. Plus, I really don't think you can compare a high-end line like MJ collection with MJ's diffusion line.
Asche Asche 7 years
WHAT are you talking about Megin? Saks is always cheaper! Especially when it comes to sales. I havn't paid full price for a pair of Choos or Louboutins in years. Last season I bought a pair of Choo flats for $120...at that time they cost $350 at NM!And furthermore, anyone who was buying Marc Jacobs collection pre-struggling economy probably still is. It's the middle class that is really feeling the recession, not so much the rich. Plus, I really don't think you can compare a high-end line like MJ collection with MJ's diffusion line.
mlen mlen 7 years
in my opinion, saks is even more expensive than neiman's. or neiman's has more of the lower level stuff (and buy low level i obviously mean it is still expensive, just not the uber expensive stuff). so maybe since the economy is bad, people are buying the lower level stuff (think marc by marc jacobs instead of plain old marc jacobs) and if neiman's has more they get more profit. just a random theory based on the mall near me that has both stores!
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