NEW YORK ( TheStreet) -- Luxury is back. Maybe not in the form of the conspicuous consumption seen pre-2008, but high-end retailers are at least starting to pick up profit gains.

That was made clear today when Saks ( SKS) posted a surprise third-quarter profit.

During the quarter, the high-end department store earned $1.93 million, or 1 cent a share, compared with a loss of $43.7 million, or 32 cents, in the year-ago period. Analysts expected a loss of 11 cents a share.

Saks even said it began seeing strength in its women's designer sportswear category, jewelry and its New York flagship store.

"Luxury was the last to go into the recession, and in many cases it fell the hardest," Needham analyst Christine Chen says. "But luxury may improve sooner than everyone thinks."

Luxury Lesson is UPROD

But to what extent the luxury sector will recover in the near-term is still up for debate.

"The luxury sector will see two levels of recovery," Marshal Cohen, chief industry analyst at NPD says. "The first will be a return to profitability, which we have already begun to see. But a true recovery won't happen until there is a growth in sales."

Despite Saks' move into the black, same-store sales for the quarter still tumbled 10%.

Cohen says it could take up to a decade for sales gains to reach the levels seen in 2007.

This is because prior to the recession about 25% of growth in luxury came from the aspirational shopper that was spending above their means, says Milton Pedraza, CEO of the Luxury Institute. As unemployment hovers around 10%, it will take longer for those shoppers to return to splurging on high-end discretionary items.

Luckily, however, the middle-luxury shopper, with an income of $1 million to $10 million, is still looking for a good deal. This bodes well for mid-tier luxury retailers like Saks, Nordstrom ( JWN) and Coach ( COH), Pedraza says.

Last week, Nordstrom ( JWN) reported a 17% jump in its third-quarter profit, upped its full-year outlook and even saw growth in the top line, as sales rose 3.5% to $1.87 billion.

Nordstrom has been winning when it comes to customer service and offering competitive pricing.

Similarly, Coach has been able to lure customers by engineering more products at a lower price point; in the $200 to $400 range.

While the accessories maker still posted a 3% slip in third-quarter profit to $140.8 million, or 44 cents a share, North American sales spiked 8%.

And Tiffany ( TIF) has been showcasing a larger presentation of more accessible items like silver and charm bracelets. The stock ranks at one of Citgroup's top holiday picks in the specialty retail sector.

On Monday, Goldman Sachs upgraded both Nordstrom and Saks, as well as Coach and Tiffany, while downgrading J.C. Penny ( JCP) and Dollar Tree ( DLTR).

"We take a more constructive view of high-end retailers and step aside from those in the path of Wal-Mart ( WMT)," the brokerage firm wrote in a note.

Still, uncertainty remains in the market. Saks and Nordstrom are cautious about the fourth quarter, both predicting same-store sales declines greater than Wall Street's estimates.

"We believe there is more stability and predictability in our business compared to 12 or even six months ago," Saks CEO Stephen I. Sadove said in a statement, "However, the overall environment remains challenging."

-- Reported by Jeanine Poggi in New York

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