Hopes bloom for high-end retailers

Department store sales are on the rise again, signalling that the worst may be over for high-end retailers, says the chief executive of Bloomingdale's.

The American department store chain will open in two locations at the Dubai Mall today.
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Department store sales are on the rise again, signalling that the worst may be over for high-end retailers, says the chief executive of Bloomingdale's. Michael Gould's remarks came yesterday on the eve of the long-awaited opening today of Bloomingdale's Dh270 million (US$73.5m) Dubai stores, the company's first outside the US.

"We're more fortunate that we're opening today than if we were opening a year ago," said Mr Gould, who is also the chairman of Bloomingdale's. "I think the business is better. It has certainly been better in the States over the course of the last six months. The holiday season was much better and January was outstanding." But conditions have been tough since Bloomingdale's linked up with Dubai's Al Tayer Group in 2008 to make its international debut.

Macy's, Bloomingdale's parent company, last month announced it would close five Macy's stores. For the year to January 2 this year, Macy's sales totalled $22.24 billion, down 6.1 per cent from total sales of $23.67bn in the first 48 weeks of 2008. But figures have improved recently and Mr Gould is confident of further growth. Macy's reported total sales of $4.42bn for the five weeks that ended on January 2 this year, which was an increase of 0.7 per cent compared with the five weeks that ended on January 3 last year.

"I think that the first quarter has very good potential up against soft numbers from a year or so ago," Mr Gould said. "I think the customer feels better about themselves. I think people think the worst is over and business will continue to rebound." Bloomingdale's has two locations in Dubai Mall, with a home store and a three-level apparel and accessories store, and a total of 527 employees. "This is not a 100 metre race; this is a marathon," Mr Gould said.

He said Dubai had been selected as a location for the brand, which was established in 1872 and now has 40 stores in the US, because of the opportunity to link up with the Al Tayer Group and because there was a gap in the market for a luxury department store. Mr Gould said it would be difficult to launch Bloomingdale's in cities such as London and Paris, which already had their own home-grown, established department stores.

"We are very optimistic about how the store is going to be performing," said Shireen el Khatib, the chief executive of Al Tayer Insignia, declining to predict when Al Tayer Group expected a return on investment. Al Tayer Group already operates stores in the region for high-profile brands such as Armani and Harvey Nichols. "I think it's very difficult to have a department store be successful in a different culture," said Mr Gould. "I think there's a good reason why no one in the US has been able to build a store in the UK, or France, or Spain, or the Far East.

"A department store is very different than a single store. A department store is really a mini mall within a mall. To me there's a DNA. Why do I want to shop in Bloomingdale's when the same products are in another store?" Mr Gould said Bloomingdale's had no plans for further international expansion. "We just want to make sure that this is enormously successful. "Like most things in life, if you do things really, really well and feel really, really good about it then maybe down the road other opportunities may arise, but at this moment we're not looking at anything else."

Global luxury sales were expected to drop by 10 per cent, from ?170bn (Dh865.48bn) in 2008 to ?152bn last year, but the Middle East's sales were expected to defy the trend and grow by 2 per cent, the research firm Bain and Company said. But the consumer sentiment reading for the UAE fell 10 points to 92 in December, which was the biggest drop of the 29 markets in a worldwide survey by Nielsen. This fall was due to Dubai World's debt standstill request, the firm said.