Count Saks Fifth Avenue CEO Marc Metrick as very bullish on the luxury goods industry post COVID-19 pandemic.
"I actually see this opportunity as we emerge from this as growth explosive," Metrick told Yahoo Finance Live. "I think people are going to be excited to dress up again. I think people are excited to feel good. I said this once before, luxury has been the comfort food during the recession. It has been the Oreo cookie of the pandemic. And I think when we come out of this, we are positioned to grow and it's going to be a great time for us."
Oreo cookie not withstanding, the luxury goods industry hasn't been immune to the pandemic despite the rip-roaring stock market supporting those well-to-do shoppers.
People have cut back drastically on dressing up in designer threads to go out out of fear for their health. Meanwhile, designers and retailers have cut choices for consumers in a bid to control inventory costs and other expenses amid the uncertainty.
The pain could be seen just about everywhere in luxury last year.
Saks — a private company that doesn't have to disclose results — saw rival Nordstrom's 2020 sales plunge by about $5 billion from 2019. Lord & Taylor declared bankruptcy and closed all its stores. New York City's luxury retail icon Barney's closed for good in early February 2020. LVMH Moët Hennessy Louis Vuitton notched a 17% sales decline for the full year.
Ugliness abound in luxury in 2020, though not as brutal as pure apparel players.
But to Metrick's point, consumer spending on apparel and accessories do appear to be picking up as people plan for post-vaccine trips this spring and summer. Spending on luxury goods are likely beginning to head in the right direction given their more affluent customer demographic, too.
At $20 billion in January of this year, sales at clothing and accessories stores have gained for two straight months. U.S. retail sales spiked 4.6% in February, according to recent data from MasterCard SpendingPulse. Online sales rose 54.7%. The CEOs of retailers Abercrombie & Fitch and Kontoor Brands have told Yahoo Finance Live the first quarter is off on the right foot.
For Saks, it will head into its post-pandemic life as an entirely new entity.
Saks' owner HBC (Hudson's Bay) said last week it will split the luxury retailer's stores business from its online business. Venture capital firm Insight Partners has injected $500 million into the online business, which will be run by Metrick. The stores business — with its 40 locations —will be run by Saks veteran Larry Bruce.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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