- Saks Fifth Avenue CEO Marc Metrick said on CNBC’s âClosing Bellâ that separating the e-commerce and physical aspects of the business made sense for the luxury retailer.
- Saks’ parent company divested the digital business of the luxury department store earlier this year.
- Activist investors have pressured Macy’s and Kohl’s to take similar action.
Saks Fifth Avenue CEO Marc Metrick said on Friday that dividing the e-commerce and physical sides of the luxury retailer into two companies allows it to gain additional buyers and welcome them differently.
âIt’s a new goal and a new way of running the business and the customer is actually the biggest winner,â he said in an interview on CNBC’s âClosing Bellâ.
He said the spin-off allowed the brand to think beyond the store.
âA traditional department store has to ask, ‘What is the business doing right now? What is it doing today?’â He said. âInstead of spending capital on investing in your physical factories, you are spending on marketing, investing in the future of your customers. And that’s a much better way to grow the business for the long term.â
The parent company of the luxury department store, the Hudson’s Bay Company, announced in the spring that it would transform Sak’s website into a stand-alone business. Metrick is now the leader of this digital company. The move prompted activist investors to pressure Macy’s and Kohl’s to take similar action.
Macy’s CEO Jeff Gennette said last month the retailer hired consulting firm AlixPartners to overhaul its business structure, after a push from activist investor Jana Partners.
Kohl CEO Michelle Gass told CNBC’s Sara Eisen in an interview on Wednesday that she was studying the idea after receiving a letter from activist group Engine Capital urging the company to sell or split its commerce division. electronic.
However, some prominent retail voices have questioned this approach or described it as a financial game to increase valuation rather than a winning business strategy.
Mickey Drexler, who has led some of the biggest names in the cast, most notably Gap and J. Crew, said in an interview on CNBC’s “Squawk Box” this week that the separation of the company creates rather than solves problems since the two sides are so closely related.
âIt doesn’t make sense to me,â he said. “That’s the simple answer.”
Metrick didn’t say the model would be good for other retailers.
âRight now what I’m focusing on is that it was the right thing for Saks to do,â he said. âThis is where we want to be with our consumers. This is how we were positioned. This is how luxury is going to evolve in the future. And I haven’t really thought about the others. I’m just really focused on Saks right now. “