Saks Files For Bankruptcy; See Impact On MI Stores

Saks Global, the holding company that owns luxury retailers including Saks Fifth Avenue and Neiman Marcus, announced Wednesday it had filed for bankruptcy.

The Chapter 11 filing occurred in the U.S. Bankruptcy Court for the Southern District of Texas, according to the company, which emphasized that stores and ecommerce remain open. Saks Global’s holdings include Saks Fifth Avenue, Neiman Marcus, Bergdorf Goodman, Saks Off 5th, Last Call and Horchow.

There are about 33 Saks stores and 36 Neiman Marcus locations, according to the company, as well as two Bergdorf Goodman stores and roughly 70 Saks Off 5th discount stores.

In Michigan, Saks Global has one Saks Fifth Avenue store and one Neiman Marcus store.

“As part of the chapter 11 process, the Company is evaluating its operational footprint to invest resources where it has the greatest long-term potential,” according to a news release disclosing the bankruptcy. “This approach reflects an effort to focus the business in areas where the Company's luxury retail brands are best positioned for sustainable growth.”

Saks Global announced it had secured a roughly $1.75 billion financing commitment, with $1.5 billion coming from a group of its bondholders and about $240 million in incremental liquidity provided by asset-based lenders.

The company also announced Geoffroy van Raemdonck, former CEO of Neiman Marcus Group, would take over from Richard Baker as CEO of Saks Global. Baker had the job for less than two weeks, stepping into the role earlier this month when Marc Metrick left the company after a nearly three-decade career with Saks.

"This is a defining moment for Saks Global, and the path ahead presents a meaningful opportunity to strengthen the foundation of our business and position it for the future," van Raemdonck said in the news release.

Saks announced it would buy Neiman Marcus for $2.65 billion in the summer of 2024, with the goal of creating a powerhouse in a luxury sector that had grown more fragmented. Online sellers have been siphoning customers, and big-name brands have expanded the number of their own stores to sell their goods.

But the acquisition only added to an already onerous debt at Saks as luxury sales weakened. Saks was having trouble paying suppliers before, and by last year, it began to stretch out payment periods, angering brands and fraying relationships.

According to the bankruptcy filing, the company listed $1 billion to $10 billion in assets and liabilities.

Global sales of luxury goods are expected to contract for the second straight year as consumers, anxious about the economy, pare back spending, according to a study by Bain & Co. consultancy released in November.

The century-old department store Nordstrom agreed to be taken private in a $6.25 billion deal last year. Sales at the long-suffering Macy’s have begun to improve under new CEO Tony Spring, but only after he shuttered faltering stores.

The Associated Press contributed to this story.