NEW YORK – Dont let the global economy fool you: Luxury is hardly dead.
Saks Inc. agreed to sell itself to Hudsons Bay Co., the Canadian parent of upscale retailer Lord & Taylor, for about $2.4 billion in a deal that will bring luxury to more North American locales.
The acquisition combines three department-store brands – Hudsons Bay, Lord & Taylor and Saks Fifth Avenue – and creates a North American upscale retailing behemoth with 320 stores in some of the biggest and most populous cities in the U.S. and Canada.
Lord & Taylor and Hudsons Bay, Canadas biggest department store chain, both cater to well-heeled shoppers who can afford $98 Free People blouses and $250 Coach handbags. Saks customers, on the other hand, are more affluent and can shell out $800 for Christian Louboutin heels or a couple of thousand dollars for Gucci handbags.
Hudsons Bay Chairman and CEO Richard Baker said Monday the goal is to bring Saks luxury brand into Canada. The company plans to open up seven Saks Fifth Avenue stores and 25 Off Fifth outlet stores to Canada, while creating a Saks website targeted to Canadians. Hudsons Bay also plans to renovate Saks stores and to make the brand more luxurious.
With the addition of Saks, (Hudsons Bay) will offer consumers an unprecedented range of retailing categories and shopping experiences, Baker said.
Hudsons Bay is making a play for luxury at a time when shoppers still appear to be willing to shell out money for posh handbags and clothing despite global economic challenges. Global luxury sales, including higher-end jewelry and clothes, rose an estimated 10 percent to $281.96 billion last year, according to the latest study from Bain & Co. In North American, luxury sales were up an estimated 12 percent to $81.33 billion.
Still, Saks has lagged behind its peers in the luxury sector. Its been trying to keep up with its rivals Neiman Marcus and Nordstrom, which have performed well post-recession.
Saks, based in New York City, will continue to run as a separate company under Hudsons Bay and will have its own merchandising, marketing and store operations employees. Key management workers are expected to remain.