* Workers hit by move to vendors staffing own counters
* Transition to be effective as of Jan. 31.
* Staff to get severance, have right to apply for jobs
* Shares fractionally lower (Updates story attribution, adds details)
NEW YORK, Dec 16 (Reuters) - Saks Inc SKS.N is cutting 116 jobs in the cosmetics and fragrance departments of its flagship Fifth Avenue store in New York as it moves to get outside vendors such as Chanel, Lancome and Clinique to fully staff their Saks counters themselves.
A Saks spokeswoman on Wednesday said the transition would be effective as of Jan. 31. The affected Saks workers, who are eligible for severance benefits, can apply for openings in other departments of the Manhattan store, the luxury retailer said.
Saks expects that "a number of the affected associates" will be asked to interview for jobs with the outside vendors.
The spokeswoman said that currently about 70 percent of workers in the cosmetics and fragrance departments are employed by outside vendors.
Last January, Saks said it would cut 9 percent of its workforce as demand for luxury goods declined in a tough U.S. economy. [ID:nN15350066]
Saks shares were down 3 cents to $6.50 in morning trade. (Reporting by Phil Wahba; additional reporting by A.Ananthalakshmi in Bangalore; editing by Simon Jessop and John Wallace)