Saks CEO Marc Metrick says e-commerce split makes sense for luxury retailer

Saks Fifth Avenue CEO Marc Metrick said Friday that splitting the e-commerce and brick-and-mortar sides of the luxury retailer into two companies is allowing it to win additional shoppers and cater to them differently.

“It’s a new focus and it’s a new way of running the business and the customer is actually the biggest winner,” he said in an interview on CNBC’s “Closing Bell.”

He said the spinoff has freed up time for the brand to think beyond the store.

“A traditional department store has to look at ‘What’s the business doing right now? What’s it doing today?'” he said. “Instead of spending capital investing in your physical plants, you’re spending on marketing, investing in the future of your customers. And it’s a much better way to grow the business long term.”

The parent company of the luxury department store, Hudson’s Bay Company, announced in the spring that it would spin off Sak’s website into a standalone business. Metrick is now leader of that digital company. The move has prompted activist investors to pressure Macy’s and Kohl’s to make similar moves.

Macy’s CEO Jeff Gennette said last month that the retailer hired consulting firm AlixPartners to review its business structure, after a push from activist investor Jana Partners.

Kohl’s CEO Michelle Gass told CNBC’s Sara Eisen in an interview on Wednesday that it is looking into the idea after getting a letter from activist group Engine Capital urging the company to either sell or spin off its e-commerce division.

Some leading retail voices, however, have questioned that approach or portrayed it as a financial game to drive up valuation rather than a winning business strategy.

Mickey Drexler, who has led some of the biggest names in retailers including Gap and J. Crew, said in an interview on CNBC’s “Squawk Box” this week that separating the business creates rather than solves problems since the two sides are so intertwined.

“It doesn’t make sense to me,” he said. “That’s the simple answer.”

Metrick stopped short of saying the model would be a good one for other retailers.

“Right now, what I’m focused on is it was the right thing to do for Saks,” he said. “It’s where we want to be with our consumer. It’s how we were positioned. It’s how luxury is going to move into the future. And I haven’t really thought about others. I’m just really focused on Saks right now.”

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