Saks' Marc Metrick: ‘ Women's Fashion Back in a Big Way'
The CEO says Saks e-commerce last quarter benefited by the rise in Americans returning to offices, traveling and attending events.
The Saks "ecosystem" of dot- com and stores is sustaining momentum as their assortments grow, diversify and capitalize on a pickup in women's luxury fashion sales.
That's the key message in the latest quarterly letter to vendors from Marc
Metrick, chief executive officer of Saks Inc., the e-commerce operation of the Saks Fifth Avenue brand. A copy of the letter was obtained by WWD from an industry source.
While major retailers including Target, Kohl's, Abercrombie & Fitch and Walmart have reported higher costs, inflationary concerns and reduced outlooks for the year, Metrick stayed upbeat in his letter and away from macro issues.
He wrote that sales at Saks.com, on a gross merchandising value basis for the first quarter of fiscal 2022, increased by 69 percent compared to the "strong" first quarter of 2021. On a two-year basis, GMV was up by 107 percent.
At the Saks Fifth Avenue stores, sales on a GMV basis were up 25 percent in the first quarter and up 34 percent compared to the first quarter of 2019.
"Both businesses benefited from growth in full-price selling and the resurgence of women's ready-to-wear," Metrick wrote.
The Saks businesses are privately owned by the Hudson's Bay Co., which does not publicly report profitability.
GMV pertains to sales of merchandise procured through traditional wholesale buying as well as through other means such as consignment, concession, or leased shop, without actually owning the merchandise.
Metrick indicated that at the Saks Fifth Avenue "ecosystem," (Saks.com and the Saks Fifth Avenue stores) GMV was up 50 percent compared to the first quarter in 2019.
By diversifying the business model,
Saks can more quickly add categories and brands it previously did not sell and expand those where it sees opportunities.
"While fashion remains at our core, we are continuing to grow our assortment with the expansion of categories that are relevant to our customers' lifestyles.
This includes home and kids, both of which performed well, achieving significant growth during the quarter," Metrick wrote.
"On the merchandising front, as confirmed by our results and the latest Saks Luxury Pulse survey of luxury consumers, women's fashion is back in a big way. Respondents shared that they are spending more time in the office, and shopping for both travel and events. Furthermore, across the Saks Fifth Avenue combined digital and physical ecosystem, we see an ongoing appetite for luxury fashion; as such, women's ready-to-wear, particularly dresses, and accessories were top-performing categories in the first quarter."
In the first quarter of 2022, Metrick wrote, site traffic increased by 49 percent and new customers increased by 56 percent.
The CEO also indicated that the company is building its consumer data set and expanding customer acquisition efforts and investments, including its reach in video campaigns and podcast advertising as well as launching advertising on TikTok.
In the letter, Metrick cited several initiatives to further customer service and personalization and an array of recent events and experiences to engage customers, including a post-purchase "ambassador" service program for higher spending customers, a 360-degree campaign featuring Academy Award-winning actress Lupita Nyong'o, and a New York Fashion Week dinner at L'Avenue at Saks.
Regarding sales at stores last quarter, top-performing categories were women's apparel and accessories, while Beverly
Hills and Boston ranked among the topperforming locations.
Metrick also noted the New York flagship "reemerged" as a top performer, driven by higher spending from top customers, including strong sales within the Fifth Avenue Club, which is the personal shopping service. Menswear on the seventh floor is being renovated. Tourism and the office population has increased in the city this year.
In addition, the Bal Harbour, Florida, store will get a new main floor, the Beverly Hills will be redeveloped, and the first Saks pop up will open in Aspen, Colorado, this summer, Metrick wrote.
The Saks e-commerce business is simply called Saks. The Saks Fifth Avenue stores is a separate company known as SFA. Larry Bruce is president of SFA. Hudson's Bay owns the companies, and hopes one day to take the e-commerce business public.
"The stores remain a vital part of the luxury shopping journey, with cross-channel customers representing a growth opportunity for both businesses," Metrick said in the letter. "This is demonstrated by the fact that the lifetime value of digital customers who previously purchased in SFA Stores is four times more valuable than those who have not. On top of this, we believe that Saks' increased marketing investment is benefiting the SFA Stores and strengthening the position that the combined Saks Fifth Avenue ecosystem holds in the luxury market. For example, new customers at SFA Stores grew by 71 percent in the first quarter..."