The Economic downturn continues to claim its victims.

Saks Inc. reported a wider-than-expected loss for the third quarter Tuesday, as the company resorted to deep discounts in an attempt to pull in affluent customers.

The New York-based operator of Saks Fifth Avenue issued a dour outlook for the holiday season, predicting deteriorating profit margins in the fourth quarter as it sees the need to keep discounting to clear out piles of designer merchandise. It also plans to cut spring inventory by 15 percent and reduced its capital expenditures for next year by 40 percent.

Saks’ shares dropped more than 14 percent, or 56 cents, to close at $3.29, and hit a fresh low of $2.71 earlier in the session. Over the past 52 weeks, shares have traded as high as $22.19.

Describing the current environment as “unprecedented,” Chairman and CEO Stephen I. Sadove told investors that the company’s shoppers are in “frozen mode.” ”Clearly, our customer doesn’t feel wealthy. They are not in the mood to shop,” he said.

Saks has tried to pull shoppers in by slashing prices, including on new merchandise — a move that hurt its profit margins. In a highly unusual move for a luxury purveyor, Saks is promoting a generous financing offer for its credit card holders — no interest for one year for purchases of $2,000 or more until Dec. 11. The purchases have to be made in a single day.

Saks expects to finish closing all 98 Club Libby Lu stores by the end of its first fiscal quarter ending May 2. Club Libby Lu, which Saks bought in 2003, caters to girls between the ages of 4 and 12. (KTLA)

On the other hand, British luxury goods company Burberry Group PLC gave a downbeat forecast as well, saying as it reported a 13 percent rise in first-half net profit that business in the second half of the year was proving more difficult, particularly in the United States.

 LONDON — Allegra Hicks, the ready to wear and home furnishings firm that counted Gwyneth Paltrow, Brooke Shields, and Oprah Winfrey among its clients, is the latest British name to fall victim to the credit crisis.

On Wednesday, chief executive Pia Marocco said the company founded by Allegra Hicks in 2003 has gone into administration, the U.K. equivalent of Chapter 11. Marocco and co-owner and designer Allegra Hicks are hunting for an investor to shore up the company, she added.

Allegra Hicks had been battling issues since its supporters refused to provide funding for its show in LFW. A spokesperson for the company issued a statement back in September 08, that

 ”It is with great regret that our sponsors withdrew from supporting our show in London in September due to the economic circumstances. We decided it was best not to show this season during London Fashion Week, but to present the new spring 09 collection after the shows in a more private environment. We will be showing our spring 09 collection to buyers as usual from London, Paris and New York.”

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