« Fountain + Person = Good | Main | More on the "Shoppingtown" branding change »
May 27, 2005
Saks closing at Old Orchard
Last month, I speculated about the anchor situation at Old Orchard, given the pending merger of Federated and May. Who would have expected that the anchor to make the first move would actually be Saks Fifth Avenue, which has announced that they are closing their Old Orchard location at the end of July.
Recently, the parent of Saks (Saks Incorporated) started the process of unloading chains in the company portfolio that didn't quite fit with their preferred direction. Recently, they sold off their southern department stores division (Proffitt's, McRae's) to Belk, Inc., which operates stores in the Southeast and Midwest. They have also expressed an interest in selling off all or parts of their northern department store division, which would include Chicago's own Carson Pirie Scott.
It seems the strategy that Saks is taking involved breathing new life into their Saks Fifth Avenue stores, stepping up to compete with Federated Macy's and Bloomingdale's. According to the Chicago Sun-Times, "The Saks Fifth Avenue store, a major presence at 72,000 square feet, opened at Old Orchard 27 years ago. The Off 5th store, measuring 33,000 square feet, opened two years ago... Saks' new focus centers on Saks Fifth Avenue stores that average 100,000 square feet."
Here's the official press release about the closing:
Saks Fifth Avenue and Off 5th to Close in Skokie, Ill.
May 26, 2005NEW YORK--(BUSINESS WIRE)--May 26, 2005--Saks Fifth Avenue Enterprises ("SFAE"), a business segment of retailer Saks Incorporated (NYSE: SKS) ("Saks" or the "Company"), today announced it plans to close its 72,000 square foot Saks Fifth Avenue store and its 33,000 square foot Saks Off 5th store, both located in the Old Orchard Shopping Center in Skokie, Illinois (metropolitan Chicago). The stores are expected to close by the end of July 2005. Both locations are leased.
Fred Wilson, Chairman and Chief Executive Officer of Saks Fifth Avenue Enterprises, commented, "This announcement is consistent with our strategy of focusing our energy and resources on our larger and more productive units. We remain very committed to metropolitan Chicago, and we will be able to enhance our merchandise assortments and service offerings at both our flagship Saks Fifth Avenue Michigan Avenue store and our Highland Park location in order to better serve our many loyal Chicago-area customers."
SFAE also will continue to operate its two other Off 5th stores in metropolitan Chicago, located at Gurnee Mills and Woodfield Village.
Approximately 70 associates are employed in the Old Orchard Saks Fifth Avenue store, and approximately 50 associates are employed in the Off 5th location. All affected associates either will be offered transfer opportunities or will receive appropriate severance packages. "We are very grateful for the dedicated Old Orchard team, and we will make every effort to provide needed assistance to our associates during this period," Wilson continued.
Saks Incorporated operates Saks Fifth Avenue Enterprises (SFAE), which consists of 57 Saks Fifth Avenue stores, 52 Saks Off 5th stores, and saks.com. The Company also operates its Saks Department Store Group (SDSG) with 232 department stores under the names of Parisian, Proffitt's, McRae's, Younkers, Herberger's, Carson Pirie Scott, Bergner's, and Boston Store and 43 Club Libby Lu specialty stores. On April 29, 2005, the Company announced that it had entered into an agreement to sell 22 Proffitt's stores and 25 McRae's stores to Belk, Inc. The sale is subject to various closing conditions, including the expiration or termination of all waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act. The Company expects to complete the sale in the second quarter of 2005.
Now the speculation can begin regarding what Westfield will do to fill this vacant space. Saks is located at the northern tip of the mall, covering the already dead and highly-vacant section known as The Promenade. This is a huge blow to occupancy rates.
But, as the Sun-Times recaps, "Old Orchard, whose owner recently dropped the name 'Shoppingtown,' is no stranger to change. Ten years ago, Chicago investor Sam Zell led a $100 million renovation and expansion that resulted in a shift toward more luxury stores. Bloomingdale's opened at the center, and Nordstrom replaced Montgomery Ward."
Posted by Tannerman at May 27, 2005 10:59 AM | Categories: Anchors | The Promenade