Financial Difficulties Leading to Potential Bankruptcy
Saks Global, the parent company of luxury retailers Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman, is anticipated to file for bankruptcy protection. The company is currently experiencing significant financial challenges.
Background on Financial Struggles
The company's financial difficulties intensified following its parent company's $2.7 billion acquisition of Neiman Marcus in 2024. While executives stated the deal aimed to reduce costs and strengthen brands, these anticipated benefits did not materialize. Saks Fifth Avenue experienced double-digit quarterly sales declines starting in early 2023.
In late December, Saks Global missed a $100 million interest payment to creditors, linked to approximately $2.2 billion of debt incurred to finance the merger. Vendors have reported extensive payment delays for months and, in many cases, have ceased shipping products to Saks. The company did not respond to inquiries regarding inventory shortages or vendor payment plans.
Leadership Changes and Asset Sales
Marc Metrick, the former chief executive, resigned in early January and was replaced by Richard Baker, the executive chairman who oversaw the Neiman Marcus acquisition.
To raise cash, Saks Global has sold various assets, including a property in Beverly Hills; however, financial distress continues.
Industry Observations and Shopper Impact
Mark Cohen, former head of retail studies at Columbia Business School, stated that the company "has exhibited all of the characteristics of a train wreck." Cohen noted that some of Saks' issues, particularly delayed payments to brands, predated the Neiman Marcus acquisition, and the merger exacerbated existing financial problems by adding billions in debt.
Shoppers have observed the company's financial turmoil through reduced inventory in stores and online, as well as recent order cancellations.