The major retailer was to be
an anchor tenant in the
$200 million project

By Peter Wagner
Star-Bulletin

Saks Fifth Avenue has shelved plans for a major department store that would have been an anchor tenant for a planned $200 million Kakaako shopping mall.

The 150,000-square-foot store was to have been a cornerstone of the 800,000-square-foot complex to be built by land owner Victoria Ward Ltd. and its mainland partner on property now occupied by Ward Warehouse. The plans, announced in November 1997, called for a massive retail project that stretched from Ward Avenue to Kamakee Street and on both sides of Auahi Street.

Jennifer Mann, a spokeswoman at Saks Inc., told the Star-Bulletin yesterday that the company is "not actively working on that project."

She would not comment further, referring questions to joint developers Victoria Ward and Simon Property Group Inc.

Mitch D'Olier, chief executive officer at Victoria Ward, today confirmed Saks is currently out of the picture and that work is in progress to reconfigure the shopping complex, and said, "We and our partners are trying to figure out what the right thing to do is." .

The complex, earlier slated to open in the fall of 2001, was to feature Saks and FAO Schwarz as anchor tenants. Also planned was a 11-screen movie theater, to be part of an entertainment complex.

D'Olier said the complex could be scaled back to about 600,000 square feet and open sometime beyond the earlier target in 2001. He noted it might be done in phases, with a smaller increment opening by spring of 2001.

He wouldn't comment on the status of other tenants. He said plans for the property may move away from luxury and toward "lifestyle" products. "The luxury goods market in Honolulu has declined slightly and our business in middle market goods has grown significantly," he said.

But D'Olier left the door open for Saks, saying the store could find a place in the planned project down the road.

"I think at some point Saks' presence in Hawaii is important because it will make Hawaii globally more competitive against other shopping destinations. Make no mistake about it, we're in competition with Las Vegas, San Francisco, Seattle, Los Angeles, Guam and Hong Kong," he said.

Birmingham, Ala.-based Saks earlier this week warned Wall Street analysts that its earnings will fall short of expectations this year because of problems at its Saks Fifth Avenue department stores and regional chains.

Chief Executive R. Brad Martin said in a news release he was planning to shelve some projects because of the company's disappointing performance this year. "A rigorous review of pending and proposed store projects has led to a cancellation of those which do not meet our return criteria," he said.

He also said future stores would be about 20 percent smaller than current prototypes.

The Ward project would join an ever-expanding Honolulu retail market, highlighted by the expansion at nearby Ala Moana Center, which recently opened another level of shops and restaurants and last fall welcomed a Neiman Marcus department store.

Ala Moana also announced plans last year for a major expansion to include shops, restaurants, a hotel, and an entertainment complex.

Since then, Ala Moana has changed ownership and the new owner told the Star-Bulletin in July that although expansion is still on the agenda, all previous plans were being re-evaluated.

The planned retail expansion comes at a time when many Hawaii stores are struggling to emerge from years of slow or declining sales as the Asian recession reined in the normally high-spending Japanese tourists.

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Bloomberg News contributed to this report.