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Luxury retailer on brink of bankruptcy filing
Saks Global, the parent company of Saks Fifth Avenue and Neiman Marcus, is poised to file for bankruptcy protection as financial pressures mount, according to industry sources. The move follows missed debt payments, strained vendor relationships, and widespread inventory shortages at its flagship stores.
Missed payments and vendor fallout
Saks failed to make a $100 million interest payment in late December, linked to $2.2 billion in debt incurred during its 2024 acquisition of Neiman Marcus. The merger, valued at $2.7 billion, was intended to cut costs and strengthen the brands but instead exacerbated financial strain.
Vendors have reported months-long delays in payments, with some halting shipments entirely. Hilldun, a finance firm guaranteeing orders for 130 brands, announced in November it would no longer approve new Saks orders. Gary Wassner, Hilldun's CEO, stated, "We had no choice."
"Right out of the gate, they stopped paying their bills. You can't stay upright as a retailer without a reliable financial relationship with your suppliers."
Mark Cohen, former director of retail studies at Columbia Business School
Inventory shortages frustrate customers
Shoppers have encountered empty shelves and canceled orders. Penelope Nam-Stephen, a longtime customer, found Diptyque's Berries fragrance out of stock at both the Boston and New York Saks locations. "Everything is out of stock-candles, diffusers," an employee told her.
Richard Browne, a five-year customer from North Carolina, had his January order for discounted Michael Kors jeans canceled the next day. "It was frustrating that I spent time finding an order, and they said, 'We're sorry, tough luck,'" he said. Browne now says he is "less likely" to shop at Saks.
Strategic missteps and leadership changes
Analysts trace Saks' troubles to its 2024 merger with Neiman Marcus, which saddled the company with additional debt. The deal's promised benefits failed to materialize, and sales have declined for consecutive quarters since early 2023.
Former CEO Marc Metrick resigned abruptly in January, replaced by Executive Chairman Richard Baker, who orchestrated the Neiman Marcus acquisition. Critics, including Cohen, argue Baker's decade-long leadership prioritized deals over operational stability.
Vendor struggles and unpaid orders
One anonymous vendor told the BBC he is owed $20,000 for past shipments and has $35,000 in unfulfilled orders on hold since October. "Nothing they do makes any sense," he said, calling the order cancellations a "desperate move."
Saks has attempted to raise cash by selling assets, including a Beverly Hills property, but its financial distress persists. In October, the company slashed its full-year outlook, citing falling sales and inventory challenges.
Uncertain future for luxury giant
While bankruptcy does not guarantee store closures, analysts question whether Saks can recover. The retailer's struggles predate the Neiman Marcus deal, with vendors reporting payment delays even before the 2024 merger.
Saks did not respond to requests for comment on inventory shortages or vendor payment plans.
