When the going is good every company comes up with good results. But when the economy is faced with a crisis, it is the tough and the wise that emerge stronger. Saks Inc. has proved that it took the right decisions during the downturn and is reaping its benefits now. They posted a soaring 51% gain in profits to $28.4 million as compared to $18.8 million a year ago. The consumer spending in the retail sector has been on the rise consistently for the last 10 months. In fact the luxury retail sector is contributing significantly to the economic recovery.
Bain & Company, leading consultants had reported last October that the crisis that was plaguing the global sales of luxury goods was over and had projected estimates of 10% growth in sales for the year 2010. Saks’ has been able to leverage these improving conditions to its advantage because they had taken some smart and tough management decisions during the crisis period. They had cut down severely on promotions, kept the inventory down to the lowest minimum possible and had negotiated hard with the designers to lower their prices. At the same time they had decided to shut down the stores that were proving to be a drag on the company as a whole.
Stephen Sadove, chairman and chief executive officer of Saks is very confident about the future as the company is financially very sound with $202 million cash in hand. He was thankful to the consumers who had responded positively to their differentiated merchandising, service, and marketing initiatives. Saks is also focusing on expanding the Saks Fifth Avenue OFF 5TH which offers luxury goods at lower price points. Saks will open four new stores this year and Off 5th will open one new store. Saks has proved that if you have the management capability you can come out on top of an adverse situation. Saks is definitely the luxury retailer to watch.