UPDATE 1-Saks to cut 9 pct of workforce, slash spending

ATLANTA Thu Jan 15, 2009 4:52pm EST

ATLANTA Jan 15 (Reuters) - Department store chain Saks Inc SKS.N said on Thursday it would cut 9 percent of its workforce, lower capital spending and reduce other costs as demand for luxury goods declines in the tough U.S. economy.

The operator of Saks Fifth Avenue stores also said it planned a 20 percent cut in inventory receipts for this year.

Saks joins other retailers that have announced staff cuts as the global markets crisis hits the investment portfolios of wealthy consumers.

CEO Steve Sadove said the company expected "the economic environment will remain extremely challenging through 2009."

On Tuesday, rival Neiman Marcus Group said it planned to cut 375 jobs and issue more debt to pay interest on some existing notes. [ID:nN13401799]

Saks, which has already announced the closure of its unprofitable Club Libby Lu chain for young girls, said it would cut about 1,100 corporate support and store jobs by Jan. 30.

It also said it would scrap merit-based pay rises, suspend matching contributions to 401(k) retirement plans for at least a year, and suspend future benefit accruals for workers still in the company pension plan.

The retailer also said it would cut costs in other areas such as procurement, information technology, distribution and logistics, travel and marketing.

Capital spending will fall more than 50 percent this year, to about $60 million, from 2008.

(Reporting by Karen Jacobs; Editing by Ted Kerr)

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