Saks Global has finally filed for Chapter 11 protection, confirming all the suspicions that had already been expressed since December about its downward trajectory, yet causing another shock to the global luxury goods industry.
The immediate cause of the application was an interest payment of $100 million due on December 30. In essence, however, the company was looking at several options for generating liquidity, before concluding that a debt-financed restructuring would be the most viable solution for its survival.
What Saks’ move means
Saks said it filed for Chapter 11 bankruptcy protection with the support of key financial shareholders and secured $1.75 billion in financing, including $1.5 billion from a pool of secured bondholders and about $240 million from additional liquidity from asset-based lenders. The company noted that all stores and e-commerce will remain open.
“This is a defining moment for Saks Global, and the road ahead offers an important opportunity to strengthen the foundations of our business and position it better for the future,” explained Geoffroy van Raemdonck, who was named chief executive of the luxury goods retailer following the resignation of previous CEO Richard Baker this week.
Dominoes of bankruptcies… luxury
Saks’ filing is the latest and largest in a series of luxury retailer bankruptcies that have rocked the industry and forced some smaller brands to close
The sudden closure of Matchesfashion in March 2024 left many brands penniless and with stock out of stock in the online retailer’s warehouses.
Ssense and Luisaviaroma, which are still in bankruptcy, owe millions of dollars to hundreds of brands.
The fallout from Saks Global’s bankruptcy may overshadow those problems, as it is a behemoth, by far the largest multi-brand luxury retailer in the U.S., with more than 60 stores between Saks Fifth Avenue and Neiman Marcus, and projected annual revenue of $10 billion.
While some brands have stopped supplying Saks and Neiman Marcus in recent seasons due to declining sales and unpredictable payments, many still rely on them for a significant portion of their business.
“The whole supply chain in the retail sector has been affected by this,” Gary Wassner, CEO of Hilldun Corporation, a company that helps designers finance large production orders for retailers, told Fashion Network. Hilldun has been working with about 140 customers that supply Saks, Neiman or Bergdorf stores as of late December, some of which rely on the retailers for 40% or more of their revenue. “No one can replace Saks,” he added.
What went wrong?
Just over a year ago, HBC, formerly the Hudson’s Bay Company, the retailer owned by real estate mogul Richard Baker, completed its takeover of Neiman Marcus, combining it with Bergdorf Goodman and Saks Fifth Avenue. The $2.7 billion deal included Amazon and licensing giant Authentic Brands Group as investors.
The combined company, rebranded as Saks Global, intended to use its size to tackle the tough problems that had undermined the once-dominant position of American department stores in retail. In particular, competition from the internet, the move away of European luxury groups from wholesaling and, more recently, the reduction in spending on luxury goods.
From the beginning, Saks Global seemed crippled by cash flow and debt problems. Combined, Saks Fifth Avenue and Neiman Marcus had accumulated $4.7 billion in debt by the second quarter of 2025. Much of that debt came from earlier acquisitions by both companies, but Saks’ parent company also raised $2.2 billion in bonds to acquire Neiman Marcus, tapping into investor demand in the high-yield credit market around the scenario of a recovery of the luxury goods industry by 2025 and millions of dollars in synergistic savings from the merger.
Saks’ hopes
For Saks, any hope of reviving the department store model also fell victim to strained relations with suppliers. The brands had complained about delayed or non-payment by Saks Fifth Avenue since 2023. The situation came to a head in February, when Saks Global promised to compensate suppliers, but on terms that only exacerbated tensions.
Businesses in the industry said the lack of confidence created a vicious cycle where insufficient product variety led to falling sales. In the second quarter, sales fell 11% to $1.6 billion, with the company citing inventory issues as the main reason.
Saks Global’s relationship with its creditors also deteriorated rapidly during the year. The company has repeatedly tried to renegotiate terms with its lenders. In June, a group of creditors agreed to issue new debt and restructure its existing loans. As of Dec. 19, some bonds were trading at 6 cents on the dollar, while senior debt, which would receive payments first in a bankruptcy, was trading at 48 cents.
Until then, Saks was exploring restructuring options, hiring law firm Willkie Farr to advise it on seeking a debtor-in-possession lender and filing for Chapter 11, according to sources familiar with the matter. In November, the company announced it was exploring selling a 49 percent stake in Bergdorf Goodman, seeking $1 billion as a means of “deleveraging” the business, according to Baker.
What will happen next?
Suppliers, already frustrated by payment delays, now face the harsh reality of trying to collect through bankruptcy proceedings – they will obviously be last on the list.
Saks, Neiman Marcus and Bergdorf Goodman remain open while the company negotiates with creditors. Some suppliers may continue shipments with stricter terms or require cash upfront to maintain a critical source of revenue, while others could reduce deliveries or withdraw altogether.
In a worst-case scenario, creditors will fail to agree to a restructuring plan or a Chapter 11 sale, forcing Saks Global into liquidation. Stores will close, inventory will be sold, and supplier requirements will drop further down the priority list.
Source:
