High gasoline prices, falling home prices and general economic uncertainty are pinching consumer spending. But the wealthy are more focused on other metrics, like the Dow Jones Industrial Average, says Stephen Sadove, CEO of luxury retailer Saks. In March, same-store sales rose 6.3 percent from the year before, and the New York-based company's first quarter earnings beat Wall Street estimates.
"How our consumer feels about their net worth does affect their behavior in terms of shopping," Sadove says in an interview with The Daily Ticker. "They are feeling reasonably good. They are secure in their financial position."
In recent months, retail sales have generally remained strong. According to the Commerce Department, at a record pace. February sales grew 1.1 percent from January, the biggest increase in five months. Excluding auto sales, retail sales jumped 0.9 percent.
While Saks customers are relatively immune to the economic challenges facing most consumers, Sadove says he did notice a pullback during the financial crisis. In his six years at the helm of Saks, Sadove says he's noticed a correlation between stock market performance and consumer spending. And with stocks recently trading at levels not seen since before the financial crisis, high-end consumers have loosened their purse-strings and boosted the bottom-line of luxury retailers. Nordstrom, a direct competitor of Saks, reported same-store sales rose nearly nine percent last month.
Sadove says customers are scooping up full-price merchandise at the company's 46 retail locations and remains confident that sales will continue to grow this year.
"Nobody feels good about $4 or $5 gas price but it's not driving the behavior of the high-end customer, and neither is unemployment," he says. Saks customers are concerned with exclusivity, fashion and service rather than price, he adds.
Which is a nice market niche to occupy in the current climate.