OutletStores

Discount Rules While Luxury Flounders

More bad news for Saks Fifth Avenue. As our sister blog Daily Finance reported, Saks has released its second quarter results beating analysts' expectations by posting a loss of $54.5 million, or 39 cents per share on sales of $561.7 million. Same store sales were down 15.5 percent. None of this is too surprising, luxury shopping has been taking a huge hit in this economy. But what is compelling is that Saks saving grace may end up being its discount outlets. An AP story said that the less-expensive Off 5th stores are doing better than Saks' full-price stores. This news comes as Nordstrom, which has also been having a rough time in this market has announced that is expanding its discount chain, Nordstrom Rack. The question I have is with the boom of outlet stores and the success of discount stores like Marshalls and TJ Maxx, who will be left to buy the items at their original prices? The discount market relies on the fact that department stores exist and that some buyers are willing to pay the premium to have their choice of designer goods. If the luxury brand buyers switch to buying the brands only at discounted rates it remains to be seen how the structure of shopping will change. I suppose the good news in this for luxury retailers is that the shopping impulse is alive and well in U.S. consumers, they just aren't willing to spend the big bucks currently.

Tags: discount, nordstrom, outlet stores, OutletStores, saks, shopping

OutletStores

Discount Rules While Luxury Flounders

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