Saks store hurt by size, and '92 slaying Glitzy retailer also felt Nordstrom's entry into Baltimore market

November 04, 1995|By Alec Matthew Klein and Kevin L. McQuaid | Alec Matthew Klein and Kevin L. McQuaid,SUN STAFF

For Saks Fifth Avenue, things never quite went well in historically blue-collar Baltimore.

The city never seemed to warm up to the retailer after it opened in the Owings Mills Mall in 1986.

Foot traffic in the glitzy department store dropped after Nordstrom, another upper-echelon store, opened in Towson Town Center on Sept. 11, 1992. And just 14 days later, the body of 28-year-old Christina Marie Brown, a cleaning company worker contracted by Saks, was found with a bullet in her back on a secluded path near the Owings Mills mall.

"Crimes, including a well-publicized major homicide, may have indeed frightened customers," a retail expert said yesterday.

But the death of Saks in Owings Mills, announced Thursday, may have been hurried along by the company itself, analysts say.

"While this is not a good sign for the retail business in Baltimore, I don't think it necessarily supports the theory that the city of Baltimore won't support an upscale retailer," said Rene Daniel, president the Daniel Group, a nationally recognized real estate consultant. "The Saks store at Owings Mills never presented a complete line of merchandise. The lack of size of the store limited the amount of merchandise they could display, and there was a consequential lack of depth of inventory."

Some customers, he said, were so disaffected with the Owings Mills store that they would opt instead to trek to the Saks in Chevy Chase -- a store nearly 20,000 square feet larger. The local Saks -- 90,000 square feet -- was overshadowed not just by Nordstrom's 223,000 square feet, but by the other anchors in the Owings Mills mall -- Macy's at 232,000 square feet and Hecht's at 161,000 square feet.

Size translates into dollars. Although Saks, a privately held chain, does not disclose detailed financial information, a source close to the company said that the store in Owings Mills generated about $15 million a year, or $166 per square foot. The competition in the mall -- Hechts and Macy's -- both did more than $200 per square foot.

The numbers apparently spoke for themselves.

"We believe that site could work well for someone else, because, like everything else, if you can get the right location and the right tenant, it works," said Russ LoCurto, Saks' senior vice president and director of operations. "Our closure announcement was basically a straight business decision, the result of poor sales."

The results were bad enough that Saks will violate an operating covenant with the Rouse Co., the Columbia-based real estate concern that owns the mall, when it shuts its store on Jan. 6, a source familiar with the agreement said. Saks was reportedly required to keep the Owings Mills store open through 2001. Saks officials declined to comment.

D8 Rouse, which has maintained full control of the mall

since buying out its partner in June 1993, is not expected to sue Saks, if only because Rouse may buy the store. At the very least, Rouse has the final word on who ends up there.

Saks has been trying to sell the Owings Mills store for $7 million, sources say, but there are no takers. Rouse is reportedly talking to both J. C. Penney Co. and Sears, Roebuck & Co. about taking Saks' space or building a new department store as part of a long-planned expansion.

Asked about the possibility of a deal, J. C. Penney spokeswoman Stephanie Brown said, "it's too premature to speculate about our taking that spot."

Sears declined to comment as well.

Regardless, either Penney or Sears would make more sense for the area, analysts say, because both would appeal to cost-conscious consumers put off by Saks' pricier goods.

"Saks has good management, they were just overpriced for the market," said Mark A. Millman, president of Millman Search Group Inc., a leading retail consulting firm whose clients include Saks. "Saks was always the most expensive store in town. This is Baltimore. This is not the fashion capital of the world."

Now, Saks is looking elsewhere. The retailer, acquired for $1.6 billion in 1990 by Investcorp, an international investment firm with offices in Bahrain, London and New York, has turned to the expansion of its discount store division.

That's where the money is -- with the exception of its flagship store in New York, which reportedly generates a quarter of the company's estimated $1.7 billion in annual sales. Saks, accelerating the growth of its Off-5th discount outlets, is expected to open 12 to 15 stores this year. The reason: the stores cost less to open, the merchandise turns faster and it's more profitable.

Baltimore just didn't fit Saks' plans.

And, as it turns out, Saks didn't fit Baltimore.

"I never see people in there," said Tish Hahn, manager of the jewelry department at the Hecht department store in Owings Mills. "They always seemed completely desolate."

Jay Apperson contributed to this story

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