Saks.com, the e-commerce company affiliated with Saks Fifth Avenue’s stores, is planning layoffs of about 100 people or just over 3.5% of its total workforce, according to a person familiar with the situation. The news was first reported by WWD.
More than half of those affected are in tech, though more than 200 people remain in technology roles, the person said by phone. The company declined to provide a statement.
Since Saks’ brick-and-mortar and e-commerce operations split up in 2021, the e-commerce business’s headcount more than doubled, and it remains more than double what it was before the separation, the source said.
Tech-oriented enterprises were still a powerful magnet for venture capital and other investments when HBC-owned Saks Fifth Avenue took the unusual step of separating its digital business from its physical stores business. But the pandemic-related e-commerce growth spurt has waned, and many investors in the space are increasingly concerned about profitability.
That shift has led to layoffs throughout the tech world, including at retail players. Amazon is letting go of more than 18,000 employees, many of them in retail. Stitch Fix also recently announced another round of job cuts, the latest 20% of its salaried workforce on top of a reduction of 15% in June. The same day the box apparel company also said goodbye to its CEO, who has been replaced by its founder in the interim. The source familiar with Saks.com’s situation noted that the impact at Saks is much smaller than most, however.
The Saks.com business, now a privately held company that doesn’t routinely release financial details, is “doing well,” the person said, noting that in the third quarter, gross merchandise value more than doubled compared to the comparable period pre-pandemic.
But few traditional retailers like Saks Fifth Avenue have been able to profitably scale their digital operations without the help of their physical stores, and it’s not clear how well the two, now separate, Saks companies work together, according to Doug Stephens, author of “Resurrecting Retail: The Future of Business in a Post-Pandemic World.”
“I doubt very much that Saks (e-commerce) is anywhere close to the break-even on the cost of e-commerce operations,” he said by email. “And I can’t speak to their true level of integration between Saks.com and their stores, but clearly the numbers aren’t strong enough to avoid layoffs.”
The move is likely also an indication of a chronic problem at parent HBC, which also owns Canadian department store Hudson’s Bay Company and that retailer’s own now-separate e-commerce company, The Bay, Stephens said. After years of acquiring various department stores in the U.S. and abroad, HBC in recent years began shedding assets and spinning off the digital operations of its remaining holdings.
“There’s seemingly very little of anything that looks like a cogent, long-term, retail strategy at HBC,” he said.
Correction: This story has been updated to reflect that the departure of Stitch Fix's CEO is not part of its workforce reduction plans.