Saks Global—the parent company of Saks Fifth Avenue and Neiman Marcus—filed for bankruptcy protection early on Wednesday, following debt struggles and sliding sales just a year after the two luxury department stores completed a $2.7 billion merger.
An exterior view of signage at the Saks Fifth Avenue department store in New York.
AFP via Getty Images
Key Facts
- In a statement, Saks Global said it has filed for Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas, “with support from its key financial stakeholders.”
- The company announced it has appointed former Neiman Marcus chief Geoffroy van Raemdonck as its new CEO, succeeding Richard Baker, who oversaw the $2.7 billion merger that combined Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman.
- Former Bergdorf Goodman president Darcy Penick has also been brought on board by the company to serve as President and Chief Commercial Officer.
- Saks Global said it has secured approximately $1.75 billion—$1.5 billion of which comes from a bondholder group—to finance its Chapter 11 restructuring.
- The company added it intends to emerge from bankruptcy later this year and expects to “honor all customer programs, make go-forward payments to vendors, and continue employee payroll and benefits.”
- The company’s retail stores and e-commerce platforms remain open.
What Do We Know About The $1.75 Billion Financing?
Once the Chapter 11 plan is approved by the court, the bondholder group—which the Wall Street Journal reports includes Pentwater Capital and Bracebridge Capital—will provide the company with $1 billion in financing to help fund its continued operation and attempted turnaround. The company said it will also receive around $240 million in credit from its lenders, led by Bank of America, according to the Journal. An additional $500 million will be made available by the bondholders after the company emerges from bankruptcy.
Key Background
In December, Saks Global failed to make an interest payment totaling more than $100 million to its bondholders. As the payment deadline loomed, Bloomberg reported that the value of some of the bonds issued by the luxury retailers had crashed as low as 6 cents on the dollar. At the start of the new year, Saks Global announced the resignation of its CEO Marc Metrick.
Faced with rising competition from e-commerce platforms and individual luxury brands opening their own stores, Saks in 2024 announced plans to acquire rival Neiman Marcus in a deal valued at $2.7 billion—including backing from Amazon and Salesforce.
The merger was completed in December that year, after Saks took on about $2.2 billion to help fund it. While the intent of the merger was to revive the department store brand’s fortunes, but the debt-laden company’s continued to see flagging sales. Last year, the Wall Street Journal reported that Saks had failed to pay several of its vendors, prompting many of them to stop shipping their products to the company.
Look back on the week that was with hand-picked articles from Australia and around the world. Sign up to the Forbes Australia newsletter here or become a member here.
This story was originally published on forbes.com and all figures are in USD.
