Make us your home page

High-end retailers scramble in search of profit

After seeing same-store sales plunge 28 percent in December, Neiman Marcus laid off 375 employees last week.

Associated Press

After seeing same-store sales plunge 28 percent in December, Neiman Marcus laid off 375 employees last week.

Forced to cut prices up to 70 percent to move holiday goods, what can upper-end department stores do for an encore?

A recession with no end in sight is providing some answers: cut staff, close more marginal stores, stock far less merchandise unworthy of full price and ditch weak labels.

Yes, holiday report cards are in. The department stores that flourished in an eight-year spending binge got some of the worst grades. In December, same-store sales dropped 28 percent at Neiman Marcus, 20 percent at Saks Fifth Avenue, 13 percent at Sears, 11 percent at Nordstrom, 8 percent at JCPenney, 5 percent at Dillard's and 4 percent at Macy's from year ago.

Last week Neiman laid off 375, mostly at its headquarters. Saks wiped out 1,100 jobs. Just before Christmas, Dillard's cut 8 percent of its salaried workers and said 21 stores will close, twice the usual yearly weeding. Macy's stock slid when the chain said it would close 11 of 859 stores, mainly because analysts had hoped dozens more would be closed. Some of the job cutbacks will be less evident at those stores that are big drawing cards to Tampa Bay area malls. But trimmed inventory and fewer deals won't be.

It's all because Wall Street has zeroed in on department store performance again. Nobody's suggesting the death of this powerful form of retailing that's been in a slow decline for 50 years. But the collapse of stock prices and a credit crunch put debt-ridden chains under the gun to improve profitability as demand weakens.

Lenders are forcing tighter credit card terms on their customers. Plus banks are yanking their credit line leashes on stores' ability to overload inventory.

Meanwhile, department stores are MIA from two new lists of the most powerful retailing brands. Not one U.S. department store operator made Deloitte Touche Tomatsu's Top 50 list of global retailer Q ratings, an assessment based on financial performance, scale and investor views of brand strength. A similar rating released last week by Interbrand Design Forum put only two department stores (Nordstrom, 13th, and JCPenney, 24th) in the top 50 U.S. retail brands.

"It's sameness: too many mall stores carrying the same stuff," said Lee Carpenter, president of Interbrand. "Department stores are seen lacking anything different and there's nothing special about most speciality chains."

Plus rampant discounting cost them any pricing credibility.

Stores are addressing shortcomings. Macy's is adding variety with toy departments and is putting restaurants in some stores.

Neiman hopes to ease the most loyal customers (the average customer drops $10,000 a year there) into a buying mood. One tactic: designer appearances for select groups of 20.

"Our customers have the money, but many are afraid to buy anything ostentatious with so many others hurting," said Burt Tansky, Neiman's chief executive. "But retailers must get away from this deep discounting. It is the road to hell."

Mark Albright can be reached at or (727) 893-8252.

High-end retailers scramble in search of profit 01/19/09 [Last modified: Monday, January 19, 2009 10:55pm]
Photo reprints | Article reprints

© 2017 Tampa Bay Times


Join the discussion: Click to view comments, add yours

  1. Pinellas construction licensing board needs to be fixed. But how?

    Local Government

    LARGO –– Everyone agrees that the Pinellas County Construction Licensing Board needs to be reformed. But no one agrees on how to do it.

    Rodney Fischer, former executive director of the Pinellas County Construction Licensing Board Rodney, at a February meeting. His management of the agency was criticized by an inspector general's report. [SCOTT KEELER   |   Times]

  2. New owners take over downtown St. Petersburg's Hofbräuhaus


    ST. PETERSBURG — The downtown German beer-hall Hofbräuhaus St. Petersburg has been bought by a partnership led by former Checkers Drive-In Restaurants president Keith Sirois.

    The Hofbrauhaus, St. Petersburg, located in the former historic Tramor Cafeteria, St. Petersburg, is under new ownership.

  3. Boho Hunter will target fashions in Hyde Park


    Boho Hunter, a boutique based in Miami's Wynwood District, will expand into Tampa with its very first franchise.

    Palma Canaria bags will be among the featured items at Boho Hunter when it opens in October. Photo courtesy of Boho Hunter.
  4. Gallery now bringing useful art to Hyde Park customers


    HYDE PARK — In 1998, Mike and Sue Shapiro opened a gallery in St. Petersburg along Central Ave., with a majority of the space dedicated to Sue's clay studio.

     As Sue Shapiro continued to work on her pottery in St. Petersburg, her retail space grew and her studio shrunk. Now Shapiro's is bringing wares like these to Hyde Park Village. Photo courtesy of Shapiro's.
  5. Appointments at Raymond James Bank and Saint Leo University highlight this week's Tampa Bay business Movers & Shakers



    Raymond James Bank has hired Grace Jackson to serve as executive vice president and chief operating officer. Jackson will oversee all of Raymond James Bank's operational business elements, risk management and strategic planning functions. Kackson joins Raymond James Bank after senior …

    Raymond James Bank has hired Grace Jackson to serve as executive vice president and chief operating officer. [Company handout]