Faced with shrinking sales and rumors of pending bankruptcy, luxury retailer Saks Inc. (SKS) announced a retrenchment plan that it hopes will enable it to weather the recession. In a February 25 conference call with investors, CEO Stephen Sadove stated that bankruptcy is not on the table at this time. Instead, the store plans to skew toward more affordable merchandise, cut inventory, and emphasize customer service.
Sadove's announcement came on the heels of an announcement that the retailer lost almost $99 million in the fourth quarter of 2008. The declining revenues were largely attributed to the company's decision to reduce the prices of its designer merchandise by up to 70%. While the reductions massively boosted Christmas season sales, they decimated profit margins.