Saks Fifth Avenue announced Monday that it has decided to close its Stanford Shopping Center store as soon as it can find a new tenant.
"After an extensive review of the store's performance and opportunities, we have determined that continuing to operate a full-service store in Palo Alto is not the best use of our resources," said Saks Chairman Philip B. Miller in a statement. "We are actively working with the landlord to find an appropriate tenant to take over our lease. In the meantime, we will hold a clearance sale at the store over the next 60 days and then operate the store under our Clearinghouse format until a new tenant comes in."
Saks Fifth Avenue's Clearinghouse stores offer clearance merchandise from the company's stores at a significant discount. The store will be closed today for the conversion and will reopen Feb. 24.
The store's 150 employees have been notified of the plan to convert and eventually close the store.
Miller said Saks would continue to serve the Bay Area through its newly renovated store in San Francisco's Union Square.
"We had heard for some time now that Saks, like some of the other major department store retailers, had been experiencing sales difficulties and might try and consolidate operations in downtowns where they seem to do well and move away from suburban locations," said Bill Phillips, managing director of real estate for Stanford Management Company.
He said Saks has 20 years left on its lease, which has clauses requiring it to operate a retail specialty or department store in the space. "I don't think that includes a discount store or an outlet," he said. "We'll see what their operation really consists of." He said the lease could be assigned to another tenant.
Miller said the decision is the result of an ongoing review of store operations. "Our objective is to ensure that our assets are deployed in markets with an excellent potential for growth," he said.
But Phillips pooh-poohed the notion that Stanford was not such a market. "Nordsdtrom does extremely good business over there," he said. "They cannot point to the trade area as being the problem."
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