Saks CEO on Q2: Profits Up Despite Double-digit Top-line Drop

Despite an 11 percent decline on the top-line last quarter and a tough overall business climate, improved inventory management and margins led to a more profitable second quarter at Saks, according to its chief executive officer Marc Metrick.

“Even with a depressed top line, we’re making considerably more money on the bottom line,” Metrick told WWD, just after he sent out his quarterly letter to vendors updating what’s going on at the company.

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While there have been market concerns about the retailer’s performance and cutbacks in orders, Metrick stated, “We’ve done a lot of work around our margin and our inventory management, and the inventory is in fantastic shape, even considering the difficult environment. From an expense and structural standpoint, we were already positioning ourselves for a much more efficient, profitable business going into the headwinds. And that’s proven to be great.”

The Saks stores and website have also undergone staff cutbacks this year, to save money and help lift the bottom line. Metrick declined to address media reports that Saks’ parent company, the Hudson’s Bay Co., is exploring a possible purchase of the Neiman Marcus Group.

The letter indicates that at, gross merchandising value for the second quarter of 2023 fell 11 percent compared to 2022’s second quarter, though Metrick indicated a two-year stacked growth of 24 percent and a 114 percent increase versus second-quarter 2019.

Women’s ready-to-wear was the top-performing category for the second quarter followed by jewelry, particularly gold jewelry. He declined to single out any designers or brands, though he said jewelry is becoming “more about fashion than it’s ever been before and much more part of the wardrobe, both for men and women.” That’s also due to rising prices on designer goods, handbags and footwear. “It’s gone up a bit,” Metrick said.

Marc Metrick
Marc Metrick

At the Saks Fifth Avenue stores, GMV fell 11 percent in second-quarter 2023 compared to second-quarter 2022. On a two-year stack, GMV for the Saks stores fell 15 percent, though Metrick also noted that 2023 second-quarter GMV is up 11 percent compared to second quarter 2019. Top-selling categories at the stores were men’s and women’s contemporary sportswear; top-performing markets were New York and Florida.

GMV across and SFA stores for the second quarter fell 11 percent compared to the same period last year, and fell 4 percent on a two-year stack. When compared to the same quarter in 2019, the combined GMV rose 34 percent.

Saks, being privately owned, does not disclose any dollar figures on sales or profits, making it difficult for outsiders to get a precise read on performances. The Hudson’s Bay Co. owns a majority stake in Saks, which is the e-commerce business of the Saks Fifth Avenue brand, and fully owns Saks Fifth Avenue, the stores business of the Saks Fifth Avenue brand.

Asked for his holiday 2023 outlook, Metrick commented, “We’re taking a measured approach. We don’t expect much to change from a behavioral standpoint, outside of expecting our core luxury customer to bounce back a little. The numbers that you see from us and others will look better. But that’s just because we’re going to start to lap what I would say was a much more turbulent period.

“We’ve got to watch out for the cost of travel. Lots of folks have indicated interest in travel for the holiday. That’s going to strike a different balance, even [more] than we saw last year, on goods versus services.”

He characterized the Saks Fifth Avenue core luxury consumer as those that index toward spending significantly on luxury and with household incomes north of $200,000, but not necessarily. “It’s more how they spend their time and their money than necessarily how much money they have,” Metrick said.

Core luxury customers, he said, “hit the headwinds later than everyone else, and they get the tail winds starting to blow before everybody else. They are certainly beginning to warm back up to spending,” he added, citing the stock market as mostly moving in the right direction and the Federal Reserve “thinking of things a little differently” regarding the overall economy and inflation.

Metrick said that with vendors and inventory, there’s been “intentional volume takeout on product that we were selling that wasn’t making money because of its price, or wasn’t right for us from a brand standpoint. So we took a lot out.

“We were expecting a pretty decent level of deceleration on the top line. And candidly, the business has been tougher. The goal is to focus on long-term, value customers. That’s going to mean more for us over time. It’s not just the rich customer I’m talking about. It can be anyone that’s more loyal over time and going to shop with us more frequently.”

Saks’ relatively new marketplace format, which carries all sorts of products that could be considered luxury, is in its early stages, currently accounting for a low, single-digit percent of’s total business. “Balenciaga and Saint Laurent are on the marketplace, even Dyson is. So it’s not just about luxury apparel or leather goods,” the CEO said.

Asked how traffic is at the Saks Fifth Avenue flagship in Manhattan, said Metrick, “It’s been coming back, but slowly. You’re not seeing the same level of tourism that existed prior to the pandemic.”

In March 2021, HBC disclosed that it split the Saks Fifth Avenue store fleet and into separate companies, and that Insight Partners, a venture capital and private equity firm, made a $500 million minority equity investment in the Saks e-commerce business. The maneuver sparked an industry-wide debate whether it would benefit or hurt the business. “We did something big a couple of years ago,” Metrick said. “The thing I want you to take away is how committed we are to the separation and the strategy. I really like how things are going and how well we’re executing it.”

In his letter, Metrick wrote, “Across the industry, U.S. consumers have continued to ease their spending on luxury goods. While we don’t foresee a significant change in these spending behaviors in the near term, we expect our comparable performance to improve versus the second half of last year, when spending among these shoppers first began to soften.

“It is worth noting that spending among the core luxury consumer is beginning to return, with 64 percent of those with an income of $200,000 or more planning to spend the same or more on luxury in the next three months, according to our latest Saks Luxury Pulse survey of luxury shoppers fielded in July. This is up from 58 percent in our prior survey, fielded in late April, pointing to a pick up in luxury spending among higher income shoppers.”

In second quarter 2023, site traffic was flat to the same quarter in 2022. Average order value increased by 9 percent “driven by high long-term value customer retention and strategies to optimize average unit retail.”

As reported last July, has changed its work culture, with executives saying that it’s breaking down silos and repositioning teams for closer collaboration, greater agility and to apply data insights more effectively to buying, planning and marketing. Ten “pods” for the different categories of business have been formed. They consist of category growth, buying and planning teams working together. The goal is to capture greater market share and provide a better online experience for customers.

In early 2024, Saks Fifth Avenue will open a replacement store in Beverly Hills, spending $52 million to relocate to the former Barneys New York location on Wilshire Boulevard. SFA is also completing renovations at its women’s store in Boston and on the men’s floors at the Manhattan flagship and Atlanta store.

Among the highlights of the quarter cited by Metrick:

  • The third class of The New Wave at Saks emerging designer accelerator program providing opportunities to engage with Saks officials and industry experts, and workshops.

  • Exclusive capsule collections with Balmain, Brunello Cucinelli, Valentino and Staud; Balmain’s first handbag shop-in-shop at the Saks Fifth Avenue Manhattan flagship.

  • The partnership with Warner Bros.’ celebrating the studio’s 100th anniversary with exclusive capsule collections Saks’ New Wave designers, Nalebe and Renowned.

  • Additional benefits for Saks Limitless VIP clients such as early access to Saint Laurent merchandise, experiences at the Cannes Film Festival for Chopard high jewelry, in Puglia for the Dolce & Gabbana Alta Moda show and in Lake Como for the Dior high jewelry show.

  • Piloting new generative AI solutions to improve productivity and scale initiatives, including website attributions, photography and product copy on, and in service centers, analyzing customer sentiment in real-time for immediate recommendations to improve customers’ experiences.

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