Saks 5th Avenue Will Eliminate 7% of Job Force

In another sign that the weakening economy is affecting consumer spending, glitzy fashion retailer Saks Fifth Avenue said today it is cutting its staff by 7% to streamline operations.

Saks, which was bought in July by Investcorp International, an Arab financial syndicate, said it will eliminate 700 positions.

The upscale store’s performance in the first half of the year fell short of its own projections, with profits at $26.3 million versus expectations of $32 million to $33 million, according to published reports.

Retailers have been reporting sluggish sales, and industry analysts are predicting that September figures will show no improvement from August. Consumers have been pulling back over signs of a recession and higher inflation caused by the jump in oil.

Saks said it sees “satisfactory” results for the current year.

Unveiling its growth strategy for the next five years, Saks said it plans to invest about $250 million to expand its business.

Saks said its strategy will focus on store renovations, and it plans to substantially increase its direct mail business.

Some Saks employees will be given a chance to buy shares in the company. All four members of senior management have bought “significant” stakes in Saks, it said.

Saks also plans to expand its resort store operations, test a new specialty store concept, and will explore opportunities for growth internationally.