Saks Files Chapter 11 As Luxury Bet Sours

BY SUZANNE KAPNER AND BECKY YERAK

The parent of Saks Fifth Avenue and Neiman Marcus filed for bankruptcy protection Wednesday, 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.

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 that was due in December and sales declining, the company ran out of time. It is now the highestprofile department-store chain to file for chapter 11 since the Covid-19 pandemic.

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

In its filing, Saks Global said it owed financial debts of about $3.4 billion. Its creditors are many of the most notable names in the fashion industry.

Chanel’s tab is $136 million, while the bill at Kering—the company behind Gucci, Yves Saint Laurent and Balenciaga— is nearly $60 million. Saks owes Cartier parent Richemont $30 million and LVMH about $26 million.

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. Back payments would be spread among 12 monthly installments beginning in July, rather than made 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.

Days after missing the $100 million debt payment, longtime Chief Executive Marc Metrick resigned. Executive Chairman Richard Baker briefly took over before stepping down as well, on Tuesday.

A bondholder group including Pentwater Capital and Bracebridge Capital has now agreed to provide $1 billion of debtor-in-possession financing to carry Saks through bankruptcy, Saks said early Wednesday. Assetbased lenders, led by Bank of America, will release about $250 million in credit. In addition, the bondholder group agreed to fund an additional $500 million of equity financing upon emergence from bankruptcy.

The company’s implosion has left the fashion industry reeling, with suppliers wondering if they will be made whole and shoppers lamenting the weakened state of yet more iconic retailers following the bankruptcies in recent years of Barneys New York, Lord & Taylor and Hudson’s Bay in Canada. (The latter two had been owned by Baker.)

Assuming Saks Global is able to reorganize and emerge from bankruptcy, it will likely be a smaller entity with fewer stores. There are about 33 Saks stores and 36 Neiman Marcus locations, a handful of which are in the same mall or city. The company also includes two Bergdorf Goodman stores and about 80 Saks Off 5th discount stores.

As part of the bankruptcy, Saks said it “is evaluating its operational footprint to invest resources where it has the greatest long-term potential.”

Department stores used to have clout over their suppliers. But in recent years, some suppliers such as Louis Vuitton parent LVMH and Gucci parent Kering tower over the retailers they sell to.

More importantly, brands of all sizes have opened their own boutiques, competing directly with their departmentstore customers.

Though Saks is inextricably linked to New York through its flagship store across the street from Rockefeller Center, it got its start in Washington, D.C., in 1867, when Andrew and Isadore Saks opened a men’s clothing store. In 1902, the brothers opened a large store in New York City’s Herald Square that sold men’s and women’s fashions. When Andrew died in 1912, his son Horace Saks took over.

Two decades later, Saks & Co. merged with another department- store company, Gimbel Brothers, which was owned by Horace’s cousin Bernard Gimbel.

Saks continued to operate as an autonomous subsidiary and in 1924 opened its now famed location at 611 Fifth Avenue. Saks was among the first large retailers to locate in what was then primarily a residential area. The building, with its limestone facade, took up an entire city block.

In the ensuing years, Saks opened stores across the U.S. and cycled from one owner to another. In 1973 it was bought by British American Tobacco. Next came Investcorp, the Bahrain investment firm, which bought the retailer in 1990.

Saks went public in 1996 and two years later merged with middle-market department- store company Proffitt’s. In 2013, it was bought by HBC, a holding company of which Baker was executive chairman. At the time, it included Lord & Taylor and Hudson’s Bay.

When HBC bought Saks, department stores had been failing for decades. Gimbels went out of business in the 1980s. Lord & Taylor filed for bankruptcy in 2020 and closed all its stores, though it continues to operate online. Neiman Marcus filed for bankruptcy in 2020 but emerged later that year. And Hudson’s Bay closed all its stores in 2025.

Part of the appeal of Saks was its real estate. Less than a year after HBC agreed to buy Saks, the chain’s Fifth Avenue location was valued at $3.7 billion— more than the $2.9 billion price of the entire deal.

Unlike some investors who buy retailers and strip them for the real estate, HBC poured money into Saks, completing a $300 million renovation of the Fifth Avenue store around 2019.

As part of the reboot, it moved cosmetics and fragrances from the ground floor, where they had resided since the store opened, to the second floor. Handbags and leather goods took over the store’s most valuable groundfloor real estate. The move was considered a gamble at the time by some industry executives because cosmetics and fragrances had long been a good source of impulse purchases and a way to pull shoppers into the store.