<\/p>\n
\n\tSaks Global is expected to emerge from bankruptcy proceedings before the end of the year with new ownership, a five-year business plan, and a strategy designed to better differentiate the merchandising and marketing of Saks Fifth Avenue and Neiman Marcus.<\/p>\n
\n\t\u201cIt\u2019s moving faster than I anticipated,\u201d Geoffroy van Raemdonck, chief executive officer of Saks Global, told WWD, exclusively discussing the Saks Global Chapter 11 bankruptcy proceedings and what to expect in the coming weeks. \u201cWe were able to make very decisive decisions in less than 60 days, to focus on luxury.\u201d<\/p>\n
\n\tSince Saks Global filed for Chapter 11 bankruptcy protection on Jan. 13, \u201cStep one was to get the financing. Step two was to get the inventory, and now we are really focused on the vision for the future \u2014 and how the company is going to be structured when it emerges from bankruptcy,\u201d van Raemdonck said. \u201cThe restructuring plan is going to be filed in weeks from now, and that will detail how this company will be structured, from a business plan, from a capital structure, post emerging.\u201d<\/p>\n
\n\tThe plan is being formulated by Saks Global in negotiations with creditors, who will vote on the plan, which then must get final approval by the bankruptcy court for the company to emerge from bankruptcy.<\/p>\n
\n\t\u201cWhat the business plan will show is that we have a plan of action to drive sales, to grow from a smaller footprint, and to be significantly more profitable,\u201d van Raemdonck said. \u201cIt is also going to demonstrate that we have ample liquidity to operate and fund the business, as well as generate free cash flow to invest in the business over the next five years. That\u2019s what this business plan will be detailing.\u201d<\/p>\n
\t\t\t\t\tGeoffroy van Raemdonck<\/p>\n
\n\t\u201cWhat\u2019s changed over the last two months is that we have $1.75 billion of committed capital. We have $825 million that we\u2019ve received, and we are receiving another $300 million in a matter of days or weeks. It\u2019s really, really close\u2026When we entered the [bankruptcy] process, we received DIP (debtor-in-possession) financing and we put in a topline revenue budget and a budget for receiving inventory, and we are exceeding both the revenue budget and the amount of inventory we are receiving, which is very encouraging.<\/p>\n
\n\t\u201cYes, we had a problem of liquidity,\u201d van Raemdonck admitted. \u201cIt led to a problem of inventory and performance. That was the summary of last year. The summary of this year is we are through a financial restructuring that gives us access to liquidity and allows us to refocus the business on the most valuable assets we have, and when we emerge later this year, we will be able to perform at the level we want.\u201d<\/p>\n
\t\tInventory Flowing In\t<\/p>\n
\n\tWhile there\u2019s no guarantee that Saks Global successfully emerges from bankruptcy this year, van Raemdonck, while being interviewed from the Brookfield Place headquarters of Saks Global in lower Manhattan, cited progress in the court proceedings, and expressed gratitude that many designers and brands have either continued or resumed shipping the luxury retailer. He said brands have committed to close to $1.3 billion of inventory. <\/p>\n
\n\t\u201cThat\u2019s 80 percent of the [spring] season that we need to have. And that number is growing week by week,\u201d he said. \u201cI was looking at our receipts this month \u2014 they\u2019re up 63 percent compared to last year, and from February to this month to date, we are up 15 percent\u2026 We have many, many brands, but if you take our top 100 or 200 brands, none have said they\u2019re not going to do business with us going forward. Brands are really catching up very fast and supporting us. I don\u2019t take that for granted. We need \u2014 and we are \u2014 actively rebuilding their trust.\u201d<\/p>\n
\n\tAccording to van Raemdonck, Saks Global\u2019s top 10 brands account for a third of the retailer\u2019s volume. \u201cWe are their largest partner in the U.S., for sure, and in most cases, globally,\u201d he said. \u201cWe have many brands that are exclusive to us, and many emerging brands that do 30, 40, 60 or more percent of their business with us.\u201d<\/p>\n
\n\tWhile resuming support for Saks Global, many designers and brands remain cautious and looking to lower risks, seeking quicker payments, sometimes upfront. Saks Global internally, working with financial advisers, compiled a list of \u201ccritical\u201d vendors it needs to have goods from, to fill its shelves and successfully reorganize, and also settle some pre-petition liabilities. <\/p>\n
\n\tSaks Global has indicated that post-petition invoices for merchandise receipts will be paid pursuant to current terms, which are set at 90 days from receipt of goods, though some vendors are getting preferential treatment with a 60-day schedule. It\u2019s expected that if and when Saks Global emerges from bankruptcy, payment terms would revert to those that were in place prior to Saks Global\u2019s acquisition of Neiman Marcus Group, though a schedule for paying vendors must be approved by the bankruptcy court judge. Thirty- to 60-day payment terms are the industry standard.<\/p>\n
\n\tUnder Saks Global\u2019s prior regime, the company largely lost the support of the fashion industry due to its failure to pay bills for several seasons and a host of unmet promises. Consequently, the stores were depleted of merchandise, market share was lost, and competitors, most notably Bloomingdale\u2019s and Nordstrom, have been taking advantage of the situation by aggressively working to add designers they did not previously sell, and provide more space in their stores to certain designers that they already did sell. <\/p>\n
\n\tBut at Saks Global, much has happened in the two months since going bankrupt to obtain financing to replenish inventories and maintain operations and set a new foundation for a potentially more viable \u2014 and streamlined \u2014 future. <\/p>\n
\n\tIt\u2019s expected that through a debt-for-equity swap, key bondholders, including Pentwater Capital and Bracebridge Capital leading the lending group arranging a $1.75 billion financing package for Saks Global in bankruptcy, will become owners in Saks Global. In effect, Saks Global will become a new debt-free or near debt-free company post bankruptcy. Hudson Bay Co., Amazon, Authentic Brands Group, and G-III all had equity stakes in Saks Global going into the bankruptcy, but it\u2019s anticipated they will see the value of those shares slip away in the court-led process. <\/p>\n
\n\tChapter 11 bankruptcy enables a retailer to get out of leases without penalty. Saks Global is closing 20 Saks Fifth Avenue stores, leaving just 13 operating, including the Fifth Avenue flagship in Manhattan, and shutting four Neiman Marcus units, leaving 32 operating. In addition, Saks Fifth Avenue was pulled off Amazon.com; one distribution center was closed, leaving three operating, though three others were closed pre-bankruptcy, leaving the company with its newest facilities that provide better service, and 57 Saks Off 5th stores are being shuttered, leaving just 12 for the time being. Saks Global has also shut down the Horchow catalogue and the five Last Call clearance centers for Neiman Marcus. <\/p>\n
\n\tSaks Global volume was listed at about $7.3 billion shortly after the Neiman\u2019s acquisition in fiscal 2024, before the streamlining.<\/p>\n
\n\tSaks Global executives leave open the possibility that a few more Saks or Neiman\u2019s stores could close. <\/p>\n
\n\tThere has been speculation of asset sales, including Bergdorf Goodman. Asked about that, van Raemdonck replied: \u201cWe are always going to continue to look at the footprint, the assets, we have. That\u2019s normal course of business. But today, there are no active conversations about any asset sales.\u201d<\/p>\n
\t\t\t\t\tBergdorf Goodman<\/p>\n
\n\tUpon going bankrupt, a new management team was set with a blend of senior executives from Saks Fifth Avenue and Neiman Marcus. Van Raemdonck became CEO of Saks Global in January, after sitting on the sidelines of luxury retailing for a year. He had been CEO of the Neiman Marcus Group for nearly seven years until it was purchased by Saks Global.<\/p>\n
\n\t\u201cI came back because I have a belief in what Saks Global can be, and I\u2019m confident that we can emerge as a strong business,\u201d van Raemdonck told WWD. \u201cWhat you\u2019re seeing is someone who is very matter-of-fact and very confident. I didn\u2019t have to do this. But I did this out of belief that Saks Global will be successful, and I\u2019m willing to put my reputation on the line.\u201d<\/p>\n
\n\tVan Raemdonck said he believes combining Saks Fifth Avenue and the Neiman Marcus Group into Saks Global is a good idea. \u201cThe merger made a lot of sense to me, because by bringing the two best players in the industry that have three banners [Saks, Neiman\u2019s and Bergdorf\u2019s] you get to attain a certain level of scale and synergies that help your overall profitability and ability to invest.\u201d<\/p>\n
\t\tCost Savings\t<\/p>\n
\n\tNavigating through the bankruptcy is further challenged by the ongoing systems integrations and consolidations initiated when Saks Global bought NMG for $2.7 billion in December 2024. The goal has been to achieve hundreds of millions of dollars in cost savings by centralizing and eliminating duplicative functions, such as accounting, planning, human resources, legal and distribution facilities. There is now one buying team for Neiman\u2019s and Saks, and one marketing team serving Bergdorf\u2019s, Neiman\u2019s, and Saks. Bergdorf\u2019s has its own buying team. Savings will also be attained through store closings, leading to layoffs and payroll reductions.<\/p>\n
\t\t\t\t\tThe Saks Fifth Avenue flagship in Manhattan.<\/p>\n
\n\tAside from cost savings, the combined business should benefit from access to greater data, sharing best practices, enhanced personalization, and increased use of AI.\u00a0Merging loyalty programs is a possibility. For example, using each retailer\u2019s credit cards to shop could earn points valid at both Saks and Neiman\u2019s. Or spending enough at either store could lead to access to invitation-only events at both Saks and Neiman\u2019s.<\/p>\n
\n\tVon Raemdonck described Saks Fifth Avenue and Neiman Marcus as the same yet different \u2014 both operating as multibrand luxury retailers but doing it in different ways.<\/p>\n
\n\t\u201cNeiman Marcus has been a relationship business and very focused on omnichannel, and on wholesale, and the metric of success was profitability,\u201d he said. \u201cSaks was a business that was focused on growth, on digital, and adopted the marketplace format much more, and it didn\u2019t have the same level of profitability,\u201d van Raemdonck said.<\/p>\n
\n\t\u201cThey were both were operating with distinct strategies that resonated with the customer, but with a different impact on profitability and generation of cash flow.\u201d<\/p>\n
\n\tSources have told WWD that among true luxury brands \u2014 such as Chanel, Dior, and Giorgio Armani \u2014 there\u2019s been about 90 percent overlap between Saks and Neiman\u2019s. But Saks has been emphasizing a wider range of categories and price points, attracting a broader demographic, and has been aggressive trying to build business online. Saks stores house many more leased designer shops than Neiman\u2019s, which has long been reluctant to open leased shops but in recent seasons has opened some.<\/p>\n
\n\tBy virtue of its Fifth Avenue flagship being a major tourist attraction, Saks has more international recognition than Neiman\u2019s. In fiscal 2025, the flagship saw nearly 3 million shoppers from over 150 countries, and generated three times the amount of business as the largest Neiman Marcus stores, according to Saks Global.<\/p>\n
\n\tAs van Raemdonck pointed out, Neiman\u2019s has maintained its focus on its wealthiest customers, through exclusive offerings, personal service and VIP-type events. Neiman\u2019s has a track record of providing deeper, broader assortments of each of the top luxury collections it sells, and has a stronger selling culture than Saks.<\/p>\n
\t\tDifferentiating the Banners\t<\/p>\n
\n\tRegarding the future of Saks and Neiman\u2019s, van Raemdonck said, \u201cWe want to separate and differentiate them. As a point of reference, if you take the six markets where Saks and Neiman\u2019s are either in the same mall, or across the street like in Beverly Hills, the overlapping customer is between 10 and 15 percent which [means] the customer is telling us they\u2019re different brands. And in the future, we want to make them even more different, so that there\u2019s a reason to shop in both of them, or to be deeply loyal with one of them.\u201d<\/p>\n
\n\tAsked how that\u2019s accomplished, van Raemdonck said, \u201cIt\u2019s in the positioning. It\u2019s in the expression, in the assortment, and it can be the same brands [sold at both stores], but the assortment should be slightly different,\u201d meaning each having a different merchandise edit.<\/p>\n
\n\t\u201cThe Saks customer likes to express herself through fashion, but she needs a little bit more guidance in choosing the fashion that is right for her,\u201d van Raemdonck said. \u201cThe Neiman\u2019s customer is a fashion customer who has her own sense of taste, loves color, and loves newness, and so their way of approaching the same element of fashion and newness is slightly different.\u201d<\/p>\n
\n\tDiscussing Saks Global overall, van Raemdonck boasted, \u201cWe have the largest base of highly engaged luxury customers. Fifty to 60 percent of our sales are with customers who shop seven to nine times a year with us, depending on the retail banner. They spend more than $5,000 with us, and we retain more than 80 percent of them. Forty percent of our sales come from customers who spend $10,000 or more with us. And so the majority of our sales are from loyal customers and when you shop seven to nine times a year, you\u2019re deeply loyal. We have a retention rate of 90 percent from top customers.\u201d<\/p>\n
\n\tOne of the big challenges in a bankruptcy is retaining employees and communicating to all constituencies concerned that the company isn\u2019t disappearing and has a future, even in a downsized state.<\/p>\n
\n\t\u201cWe are doing this very, very frequently and very openly, because transparency is critical,\u201d van Raemdonck said. \u201cThis morning I was talking with our employees in Bangalore. We have a whole team there that supports us across all functions,\u201d including creative, planning, merchandising and payroll functions. \u201cThis Monday, we had what we call an \u2018All Access,\u2019 meeting which is our all-employee town hall. We call it All Access because everyone gets a front row seat [it\u2019s a virtual meeting] and everyone gets access to the information.\u201d It\u2019s a monthly event. \u201cAnd then we meet with our leadership council, the top 50 people in the organization, every other week. And every week, we talk with the ad hoc group of creditors, and we are meeting in person with the unsecured creditor committee [Thursday] to share with them our business plans. So the communication is very, very frequent. We communicate with brands on a very frequent basis, at my level, and then Lana [Todorovich, chief global brands partnerships officer] is with the brands on a daily basis.<\/p>\n
\n\t\u201cWe have more than 1,500 sales associates who sell at least $1 million per year and in aggregate deliver more than $2.8 billion of revenue,\u201d the CEO added. \u201cOver the last 12 months, our attrition rate amongst top sellers that sell more than $3 million annually is in the low-single digits.\u201d<\/p>\n
#Navigating #Saks #Global #Bankruptcy #Roadmap #Ahead<\/p>\n","protected":false},"excerpt":{"rendered":"
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