Inside Saks Global’s bankruptcy: luxury slowdown and a debt-heavy acquisition

Saks Global, the parent organisation of the storied American luxury department store chain Saks Fifth Avenue, filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the Southern District of Texas late Tuesday.

The filing represents a critical turning point for the retailer as it grapples with a mounting debt burden and a strained relationship with its global supplier network.

“With support from its key financial stakeholders, Saks Global has commenced voluntary chapter 11 cases in the US Bankruptcy Court for the Southern District of Texas (the ‘Court’) to facilitate its ongoing transformation,” the company announced in a statement.

The restructuring process brings an immediate change to the executive suite.

Richard Baker is stepping down from his role as Chief Executive Officer, with former Neiman Marcus head Geoffroy van Raemdonck assuming the top position to navigate the company through its court-supervised reorganisation.

“In close partnership with these newly appointed leaders and our colleagues across the organisation, we will navigate this process together with a continued focus on serving our customers and luxury brands. I look forward to serving as CEO and continuing to transform the Company so that Saks Global continues to play a central role in shaping the future of luxury retail,” van Raemdonck said in the Saks statement.

To support its operations during the bankruptcy proceedings, Saks Global has secured $1 billion in debtor-in-possession financing.

This capital is expected to provide the liquidity necessary to fund day-to-day operations and turnaround initiatives.

Furthermore, a group of bondholders has reportedly agreed to provide an additional $500 million in financing once the company emerges from bankruptcy.

How the Neiman Marcus acquisition added to Saks’ financial woes

The current financial crisis follows a high-profile 2024 merger in which Saks owner HBC acquired Neiman Marcus for $2.65 billion.

The deal was intended to create a luxury retail behemoth capable of negotiating more favourable terms with individual brands while revitalising the physical store experience.

Executives argued at the time that the $2.7 billion deal would reduce costs and bolster the standing of both iconic labels.

However, the anticipated synergies failed to materialise.

Instead, the acquisition added billions in debt to a balance sheet already under pressure from shifting consumer habits and the rise of e-commerce competitors.

Saks Fifth Avenue had been reporting double-digit quarterly sales declines as early as 2023, and the financial weight of the merger proved unsustainable.

In late December, the company missed a $100 million interest payment tied to approximately $2.2 billion in debt utilised to fund the Neiman Marcus transaction.

Vendor payment delays preceded Neiman Marcus acquisition

Industry analysts suggest that the roots of the crisis extend beyond the recent merger.

Mark Cohen, former head of retail studies at Columbia Business School, noted in a BBC report that some of the company’s challenges date back more than a decade.

He argued that the leadership’s historical focus on deal-making sometimes came at the expense of the core business’s operational integrity.

Suppliers featured across the retailer’s physical and digital storefronts have voiced grievances regarding payment delays dating back to the period preceding the Neiman Marcus acquisition—a clear precursor to the company’s deepening liquidity crisis.

The consolidation two years ago exacerbated these underlying fiscal pressures.

By assuming billions of dollars in new debt to capitalise the transaction, Saks significantly increased its total liabilities while simultaneously carrying substantial arrears to its existing vendor base.

“Right out of the gate, they stopped paying their bills,” Cohen said.

“You can’t stay upright as a retailer, whether you’re a discount retailer or a luxury player, without having a reliable, consistent financial relationship with your suppliers.”

For months, suppliers have reported significant payment delays, leading many to halt shipments.

While some brands continued the partnership to maintain their presence in the luxury market, others severed ties entirely as cash flow constraints worsened.

A proposal last February to settle overdue balances in twelve instalments did little to restore confidence among the fashion houses that supply the retailer’s inventory.

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