Big spenders still hesitant to part with money

Luxury shoppers at Saks, the high-end department store, are not yet up to indulging themselves.

Despite a partial rebound in the U.S. stock market after last year's financial meltdown, the store's shoppers are not feeling their wealth, Saks Chief Executive Stephen Sadove said on Tuesday.

"The stock market at 10,200 is a lot better than 6,500, but a lot lower than where it was at 14,000," Sadove told Reuters in an interview. "The luxury consumer is very cautious and the recovery is very fragile."

"It's a little less bad, but not good," he said.

The forecast for sales at stores open for at least a year is a drop by a percentage in the single digits during the holiday season, after a year of double-digit declines.

Some of the upside came from the strength of the euro as European tourists flocked to Saks' flagship Manhattan store. Visitors to New York account for about 20 percent to 25 percent of business of the original Saks' Fifth Avenue.

The store represents about one-fifth of the chain's sales.

Sadove said the U.S. slowdown has not been without its benefits. Fewer people may be able to afford to shop at Saks, but that is enhancing the chain's cachet and an aura of exclusiveness essential to a high end retailer.

"Limited availability, a little bit more special, that really is what the heritage of what Saks is all about," he said.

While Saks is ready to offer discounts this holiday season, as it always has in normal times, consumers should not expect a fire-sale bonanza like they saw last year.

"We're making progress in trying to train our customers towards a less promotional environment," Sadove said.