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Tough times hit luxury chains, too

Fretting their business won't bounce back as quickly as the economy, many trend-driven retailers that cater to the affluent have dug deeper.

Neiman Marcus added 400 layoffs to the 375 in January. Saks Fifth Avenue volunteered in an earnings call that bankruptcy was not an option. Even Target, the discounter that uses limited-edition deals with designers to be trendy, said it will shift more floor space to basic merchandise — food, baby products, household items and health and beauty products — to be more recession-resistant like Wal-Mart.

Nordstrom chopped construction spending in half and said it will open only three new full-line stores this year. The expansion emphasis shifts to adding 10 Nordstrom Rack stores to its 56-store off-price chain.

That reconfirms that a full-line store planned for Sarasota in 2011 is on hold until the economic clouds part. But it also means Nordstrom Rack will make its Central Florida debut this fall across the street from Mall at Millenia in Orlando and Tampa Bay area developers will have a new off-price anchor to chase. Currently, the closest Nordstrom Rack is in Sawgrass Mills, near Fort Lauderdale.

Behind the dour outlook: The luxury chains figure that when the economy does comes back in 2010, the aspirational upper-middle-class shopper who made the good times roll for them a few years ago won't come with it.

That's why Saks, which recently launched a line of "can you top this" $7,000 men's suits, also is beefing up its selection of apparel priced to compete directly with the top-end men's and women's apparel sold at Macy's and Dillards.

What are Saks luxury customers buying now?

"We're selling a lot of blouses, a lot of knitwear, a lot of dresses and a lot of color for spring," said Ronald Frasch, Saks' chief merchandising officer. "But it's items that enhance their current wardrobe."

• • •

Now that the Belgians at InBev own Anheuser-Busch Cos. and SABMiller, which is either a British or South African company, just acquired Molson-Coor's, what's the biggest American-owned brewing company left standing?

Some would suggest Pabst Brewing Co. which produces 6 million barrels a year. But the Chicago company uses SABMiller breweries to make all its lines of Pabst, Old Milwaukee, Stroh's, Schlitz and Colt 45.

So the largest that owns an actual brewery now is Boston Beer Co., maker of 2 million barrels of Sam Adams products a year, followed by Yuengling, the Pennsylvania brewer that makes 1.7 million barrels, much of it at a plant in Tampa.

That's not quenching much of Americans' 214 million barrel thirst for beer last year.

"It was predicted a decade ago there would be only one U.S. brewing company left," said Eric Shephard, executive editor of Beer Marketer's Insights, a trade journal. "But nobody saw this. Everybody presumed it would be Anheuser-Busch."

Incidentally, InBev Anheuser Busch is weighing selling its aluminum recycling operations and theme parks, including Sea World and Busch Gardens Africa in Tampa, to help raise $7 billion to pay off the $52 billion purchase price for A-B.

The credit crunch, as well as InBev's recently renegotiated bridge loan, has taken much of the urgency out of an immediate sale.

The parks and recycling units are among five potential asset sales InBev is weighing to raise the money. The others are its South Korean breweries, which are reportedly worth $2.5 billion, the Czech Staropramen brewery that Heineken is interested in buying for $272 million and its German Beck's franchise.

Mark Albright can be reached at albright@sptimes.com or (727) 893-8252.

Tough times hit luxury chains, too 03/02/09 [Last modified: Monday, March 2, 2009 11:20pm]
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