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Meanwhile, Saks continues to upgrade its flagship in New York through an ongoing $100 million renovation. The success of the flagship is crucial. Retailing in the city has been down since Sept. 11, 2001, and Saks Fifth Avenue, considering its high percentage of shoppers from out of town, has been slow to rebound. The 61-store Saks Fifth Avenue chain has sales of about $2.4 billion, and the flagship accounts for about 25 percent of the total.
Since the flagship renovation began about a year-and-a-half ago, men’s sportswear on seven; Salon Z for large sizes, and men’s furnishings, as well as the fine and fashion jewelry and accessory areas, have been renovated. In the main-floor accessories and fine jewelry areas, gone is costume brand Carolee, while fine jewelry brands such as Graff, Cartier, Chopard and Bulgari have moved in. Men’s accessories were relocated to six, next to men’s clothing.
Next up on the renovation schedule is the cosmetics and fragrance area on the main floor, starting this month, where sight lines will be dropped and fixturing lowered to maximize the grandeur of the floor.
It’s a top-to-bottom overhaul, with a schedule that’s been stretched out, at least a year longer than originally anticipated, so that expenses are more in line with the pace of the business.
"When the renovation is complete, there will be no other store in the world like this," Johnson contended, referring to the enlarged scope of the designer presentation.
Johnson also said the main floor of the two-level Atlanta store might be renovated, that Saks is opening in Richmond and Indianapolis next fall and the company is considering two other openings in 2004. Asked how many stores Saks Fifth could ultimately operate, Johnson replied: "I don’t believe there is a ceiling. We continue to look at smaller markets. New stores going forward may be smaller rather than larger."
Others think Saks is close to saturation in the U.S. "Basically, the growth is going to have to come from remodeling or enhancement or increasing space in some of their hotter properties," said Arnold Aronson, managing director of retail strategies for Kurt Salmon Associates. He is a former Saks Fifth ceo who also once headed up Batus Retail, which owned Saks Fifth Avenue until Investcorp bought Saks, and subsequently sold it to Saks Inc., formerly Proffitt’s, in 1998.