Saks Global files for bankruptcy, undone by debt and a luxury slump

The parent of Saks Fifth Avenue and Neiman Marcus filed for bankruptcy protection, barely a year after an ambitious bet on luxury department stores brought the two storied retailers together in what was supposed to be a powerhouse deal.

- Suzanne Kapner & Becky Yerak

Saks is now the highest-profile department-store chain to file for chapter 11 since the pandemic. BLOOMBERG

The swift unraveling of Saks Global shows the perils of doubling down on department stores, whose golden days are long past. The plan behind the $2.7 billion merger was to create a luxury juggernaut, while cost savings from the deal were expected to help Saks dig out of a deepening hole of delayed payments to suppliers.

But with a roughly $100 million debt payment looming in December and sales declining, the company ran out of time. It is now the highest-profile department-store chain to file for chapter 11 since the pandemic.

Geoffroy van Raemdonck, the former chief executive of Neiman Marcus, has now been picked to lead Saks through bankruptcy as its CEO, effective immediately. In all, Saks has secured roughly $1.75 billion in financing for the process, the company said early Wednesday.

Things went wrong for Saks even before its merger with Neiman Marcus. A widespread slowdown in luxury goods that began in 2023 hurt sales. Saks struggled to pay vendors, some of which curtailed shipments or stopped shipping goods. That made it harder for Saks to bring in revenue. Saks further angered suppliers last February, when it extended payment terms to 90 days from the typical 60 days. Back payments would be spread among 12 monthly installments beginning in July, rather than in a lump sum, according to a memo sent to suppliers on Valentine's Day.

The company raised an additional $600 million in June through a debt restructuring. But sales continued to fall, dropping 13% from a year earlier to $1.6 billion for the period ended Aug. 2. The net loss widened to $288 million.