Need alterations
Off-price luxe retailers losing shine
The once red-hot off-price operations of upscale department stores have cooled considerably.
Over the past several months, Neiman Marcus has closed three of its Last Call off-price stores — and this week the Dallas chain said it would be “assessing” the Last Call portfolio “to ensure we have the right mix of brick- and-mortar and online stores.”
At Neiman rival Nordstrom, which has been aggressively doubling down on Nordstrom Rack, its offprice stores, performance has been ebbing.
While 13 of Nordstrom’s 16 new locations this year will be Nordstrom Rack, samestore sales at the off-price nameplate have slowed to 2.3 percent in the first quarter — down from a 4.6 percent rise a year earlier.
Sales per square foot at Nordstrom Rack dipped to $120 from $123 a year ago — the result, the company said, of lower-priced goods rather than fewer items sold.
The flood of off-price stores into this niche appears to be forcing price cuts.
Saks Off 5th, the off-price chain of Saks Fifth Avenue, has opened seven new stores this year, with another six planned through Dec. 31.
But while expansion rolls on, same-store sales at Saks Off 5th fell 6.8 percent in the first quarter. A year earlier, same-store sales were off 4.1 percent.
The declines include same-store sales at the much-smaller Gilt.
At Neiman, the announcement that it is taking a second look at its off-price operation has some industry experts questioning whether even the onetime off-price darlings of the retail industry are losing their luster.
“The Last Call news is the first suggestion that the luxury off-price sector is maturing,” despite a rash of new store openings, said Steve Dennis, a retail consultant and former Neiman Marcus executive.
Meanwhile, Neiman Marcus’ woes are not limited to its 37 off-price stores.
The Dallas luxury retailer is also eliminating 225 jobs across all its brands and operating divisions, the company said.