Saks Takes Steps to Mitigate Losses
May 19, 2009 by Mark Ellis
Filed under Business
In the wake of surprisingly high first-quarter losses, Saks Inc. plans to drastically reduce its overhead costs through a variety of measures. Among these, the department store giant plans to cut staff salaries, adjust their merchandise to each individual region’s tastes, and incorporate lower-priced merchandise throughout its stores.
Image: Flickr
Although Saks has traditionally strived to maintain its status as a luxury retailer, the state of the economy has made it necessary for the company to diversify its merchandise so that a wider group of shoppers can afford their wares. Unfortunately for Saks, walking the tightrope between luxury and affordability has been less than successful.
Employees will receive pay cuts ranging from 3% to 7% starting in June. In addition, 9% of Saks employees, a total of 1,100 jobs, are expected to be cut. Through these and other cost-reducing measures, Saks hopes to shave about $60 million off of its overhead.
As the economy continues to struggle, only time will tell if shoppers will continue to avoid high-priced retailers like Saks in favor of more budget solutions.
