Retail scene is polarizing by income.
Friday, August 22nd, 2008A new, emerging economy is now apparently coming into view. And it is becoming apparent that the luxury market will not hold as well as many had hoped. That is one conclusion one can read from Saks Fifth Avenue’s dismal third quarters earnings report.
The premier department store had a loss of $31.7 million versus a loss of $24.6 million last year and revenues fell 3.5 percent. For the remainder of the year, management believes sales will be unchanged to down in the single-digit range. Most analysts believed Saks’ luxury position with major locations in travel-related cities would allow it to escape relatively unscathed.
The U.S. is seeing middle and upper middle class migrations to discount retailers that offer greater value to consumers, who are pinched by increasing costs for food, energy and shelter. With that in mind, Target, which also released its numbers Tuesday August 19th, saw an 8 percent drop with quarterly profits of $686 million. Same store sales were down four-tenths of a percentage.