By February, the Saks Folio apparel and home decor catalogs and the Bullock & Jones men’s apparel book will cease to exist. Birmingham, AL-based parent Saks Inc. (formerly Proffitt’s) is phasing out the titles and integrating the Saks Website with the Saks Fifth Avenue stores.
As part of the streamlining, about 50 corporate positions will be eliminated by February. Other layoffs will occur by the end of the first quarter of 2002 in the fulfillment and call center operations. The catalogs and the Website brought in $126.7 million in sales last year for the $3.84 billion Saks Inc. In addition to its namesake retail chain, Saks also owns retailers Proffitt’s, McRae’s, Younkers, Parisian, Herberger’s, Carson Pirie Scott, Bergner’s, and Boston Store.
To retain Folio customers, Saks plans to increase circulation of its traffic-driver “store books,” complete with prominent toll-free phone numbers and order forms. The company will stop prospect mailings, focusing on customers located near its stores.
“Saks is trying to keep the best part of its catalog business while getting rid of overhead it can’t afford to maintain,” observes Christopher Schulz, an analyst with New York-based investors newsletter Spin-Off Report. “As it sells off or disposes some operations, such as the catalog, the moves are geared toward preserving cash flow to pay down debt.” For 2000, Saks’s total debt to total capitalization ratio was 44.1%, slightly down from 47.2% in ’99.
With the wind-down of the catalog operations, Saks expects its catalog/Internet revenue to drop to $100 million for 2001. Next year, the elimination of the business will drop the catalog sales to $45 million: That’s the amount that the company expects will come from retail shoppers who prefer to order direct via Saks’s toll-free number or online.
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