Evercore ISI senior managing director lays out his price targets for Amazon and Expedia in ‘Varney & Co.’
Saks’ parent company, Saks Global Enterprises, filed for bankruptcy protection Tuesday in the U.S. Bankruptcy Court for the Southern District of Texas after missing a $100 million interest payment in December, adding to mounting debt.
Following the filing, Saks Global announced Wednesday that it has secured a financing commitment of approximately $1.75 billion, backed by senior bondholders and asset-based lenders, to support operations during the restructuring.
The company also appointed Geoffroy van Raemdonck as CEO with immediate effect.
It said stores and e-commerce operations at Saks Fifth Avenue, Neiman Marcus, Bergdorf Goodman, Saks OFF 5TH, Last Call and Horchow will remain open.
LUXURY RETAIL GIANT SAKS WEIGHS BANKRUPTCY, REPORT
Pedestrians pass the Saks Fifth Avenue department store in New York City. (Victor J. Blue/Getty Images/Getty Images)
It was seen by Saks as a strategic move to strengthen the company and better compete with online luxury rivals and major players such as Nordström and Bloomingdales.
“This is a defining moment for Saks Global, and the path ahead provides a meaningful opportunity to strengthen the foundation of our business and position it for the future,” said Van Raemdonck. “Working closely with these newly appointed leaders and our colleagues across the organization, 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.”
After missing its debt payment, the company had just 30 days to make the payment or face a formal default that could lead to bankruptcy, said Tim Hynes, global head of credit research at financial intelligence firm Debtwire.
The bankruptcy filing comes about a year after Canada-based conglomerate Hudson’s Bay Co., which has owned Saks since 2013, completed its approximately $2.7 billion acquisition of Neiman Marcus Group in December 2024 to build out a larger luxury retail platform under the newly formed Saks Global Enterprises brand.
An entrance to Saks Fifth Avenue at the Galleria Tuesday, July 30, 2013 in Houston. (James Nielsen/Houston Chronicle via Getty Images/Getty Images)
Saks Fifth Avenue’s parent company became owner of Neiman Marcus and Bergdorf Goodman and spun off its U.S. luxury assets.
Richard Baker, executive chairman of Saks Global, said the deal marked a “transformative moment for Saks Global and the luxury retail industry” as it “created an unparalleled multi-brand luxury portfolio with tremendous growth potential.”
However, to finance the acquisition, Saks took on approximately $2.2 billion in debt.
SAKS FIFTH AVENUE CLOSES SAN FRANCISCO LOCATION AFTER ALMOST 45 YEARS
“The deal was based on aggressive profit forecasts and assumptions about cost savings that have not been realized, while the additional leverage is difficult to sustain in a structurally declining retail sector,” Hynes said.
To compound the problems, companies also increasingly encouraged their customers to buy directly from their own independently owned stores and websites, directly hurting larger department stores like Saks and Neiman.
Holiday shoppers walk outside the Saks Fifth Avenue flagship store in Manhattan in New York City, December 5, 2023. (REUTERS/Mike Segar/File Photo / Reuters Photos)
Hynes said it was clear the company was already short of cash heading into the critical holiday shopping season, “constraining inventory levels and undermining any near-term turnaround.”
He also noted that while asset sales, such as the recent sale of Los Angeles flagship Neiman Marcus, may provide temporary relief, they are not a long-term solution.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
As part of the restructuring, the company may have to focus on renegotiating leases that expire in the new year, putting the future of its iconic Fifth Avenue flagship in doubt.
Shoppers at the Saks Fifth Avenue flagship store in Manhattan in New York City, January 6, 2026. (REUTERS/Angelina Katsanis / Reuters Photos)
“While it may survive an initial restructuring, the highest value for that land is certainly not that of a retail store,” Haynes said.
Reuters contributed to this report.
