The parent company off luxury clothing retailer Saks OFF 5TH is closing most of the stores in that chain, including its remaining two Connecticut locations, as part of its on-going Chapter 11 bankruptcy reorganization, company officials announced late Thursday.
Saks OFF 5TH stores on High Ridge Road in Stamford and at Clinton Premium Outlets will close Monday, according to the retailer's corporate parent Saks Global Enterprises LLC. A dozen Saks OFF 5TH locations around the country, including Woodbury Commons Premium Outlets in Orange County, N.Y. will remain open "to serve primarily as a selling channel for residual inventory from Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman."
Those other luxury brands all come under the Saks Global Enterprises umbrella. Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman stores and ecommerce experiences are open and serving customers as usual, according to company officials
In addition to closing all but a dozen of its Saks OFF 5TH locations, Saks Global Enterprises will close all of its remaining Last Call stores beginning Saturday.
Company officials said this latest move in the bankruptcy reorganization process is being done to "to wind down the majority of its off-price operations, sharpening its focus on luxury retail and full-price selling across its iconic portfolio."
"These actions are part of the company's ongoing evaluation of its operational footprint to ensure it remains well positioned to invest in areas that present the greatest opportunities for sustainable, profitable growth for its luxury retail brands and partners," the Saks Global Enterprises statement said in part.
Saks OFF 5Th is also winding down its online presence, saksoff5th.com, The online operation is a separate legal entity from Saks Global Global Enterprises.
The online operations closing sale started today. Geoffroy van Raemdonck, chief executive officer of Saks Global Enterprises, said the company's actions represent "decisive steps to realign our business to better serve our luxury customers and drive full-price selling across our core luxury businesses."
Saks OFF 5TH closed its West Hartford store earlier this month, as part of its Chapter 11 bankruptcy filing. The closing of the store in West Hartford's The Corbin Collection shopping center had been the subject of closing rumors for months leading up to the shutdown.
Retail and economic experts disagree on whether the store closings are indicative solely of a problem at Saks Global Enterprises or portend a deeper economic downturn.
"One would think that luxury retailing would be protected from the problems facing other retailers," said David Cadden, a professor emeritus at Quinnipiac University's School of Business. "You have to wonder whether it was problem with the management of that particular company. If you've over-expanded your bricks and mortar locations, you're going to get yourself into trouble."
Cadden said retailers are constantly under pressure to expand the profits of their business.
"You expand by either growing sales at existing stores organically or you increase the number of stores," he said. "And when you increase the number of stores, you increase the costs associated with inventory, with personnel and with insurance. It's matter of management's reach exceeding its grasp,
David Sacco, a lecturer at the University of New Haven's Pompea College of Business. said while the decline of bricks and mortar retailers has been going on for a long time, certain retail concepts have run their course.
"The high end shopping experience isn't working any more," Sacco said. "A lot of these retailers have become more like (automotive) showrooms where consumers come in, but they don;t buy. And Saks probably clung on to that business model a lot longer than they should have."
Donald Klepper-Smith, an economist with South Carolina-based DataCore Partners, the current retail landscape "is going through a sea change."
"Consumer fundamentals are weakening substantially" Klepper-Smith said. "You add that to the fact that inflation is much higher than is being reported and that;s eating into consumer spending power."
Cadden said consumes are looking to reduce expenses and "expenditures like that (luxury retail goods) are at the top of the list to be cut because there is a tremendous level of anxiety now."
From a retailer's perspective, Klepper-Smith said even well known brands like Saks "are playing defense right now."
"This is a time when they are looking at things strategically, in terms of reducing expenses," he said, "We're continuing on the precipice of a recession. The average recovery is five years and we hit that point last April."