Saks Global, the parent company of luxury department stores Saks, Neiman Marcus and Bergdorf Goodman, filed for bankruptcy on Tuesday as it struggles to pay its bills amid declining sales and crushing debt.
The company commenced voluntary Chapter 11 cases in the U.S. Bankruptcy Court for the Southern District of Texas, it said in a news release. It will seek to “honor all customer programs, make go-forward payments to vendors, and continue employee payroll and benefits,” it said. Its stores remain open.
Saks said it had secured financing of $1.75 billion from its creditors. Upon court approval, this financing package “will provide ample liquidity to fund Saks Global’s operations and turnaround initiatives,” the company said.
The announcement comes after Saks missed a $100 million interest payment due Dec. 30, which was connected to its nearly $2.6 billion acquisition of Neiman Marcusin 2024. Saks Global’s chief executive Marc Metrick stepped down days later, marking the end of nearly three decades with the company. His replacement, executive chairman Richard Baker, held the role for less than two weeks before he too announced he was departing the company.
Saks said Geoffroy van Raemdonck, who served as Neiman Marcus’s chief executive prior to its acquisition by Saks, will replace Baker.
“They borrowed a lot more money than they should have for a company that isn’t growing — it’s a slow-melting ice cube,” said Tim Hynes, the global head of credit research at Debtwire. “If you have declining sales, you have to have a lot of cushion, and if you don’t … that’s how you wind up getting in trouble.”
The Saks-Neiman Marcus merger was meant to buoy both retailers as department stores continue to lose relevance and consumers are increasingly reticent to spend on nonessentials. During the holiday shopping season, transactions at high-end department stores from Black Friday to Cyber Monday fell 10 percent compared with the same four-day stretch a year earlier, according to Consumer Edge, which tracks transaction data on U.S. credit and debit cards. They also lagged those of their off-price peers.
But Saks, in particular, struggles to draw in customers, said Shawn Grain Carter, a professor at the Fashion Institute of Technology. Saks Global posted second-quarter revenue of $1.6 billion in October, a more than 13 percent decline year-over-year.
It has also fallen behind on paying its vendors, leaving its stores with a limited assortment of products, according to Debtwire and other news reports. Several vendors have sued the company over the past two years, alleging it did not pay its bills for hundreds of thousands of dollars worth of women’s apparel, winter accessories and jewelry.
“Some of their competitors have more freshness in their merchandise assortment,” Carter said. “And if vendors are not shipping to you because they’re hearing rumblings that you’re having trouble paying, that’s not good when the fourth quarter is the most important quarter for us to generate gross margin profit and revenue.”
The luxury sector has seen mixed results this year as higher-income buyers grow choosier about which brands are worth the price tag. Some designer conglomerates, such as LVMH (Louis Vuitton, Dior, Givenchy), Kering (Gucci, Balenciaga, Bottega Veneta) and Capri Holdings (Michael Kors, Jimmy Choo) expect revenue to decline, especially in categories such as handbags, which have increased in price over the past few years.
Shoppers also are increasingly loath to make such hefty investments — luxury purses can run from several hundred to several thousand dollars — with little newness on shelves, analysts say. Meanwhile, customers are finding greater value in brands such as Hermes, Prada, Ralph Lauren and Coach, all of which expect positive growth.
But it’s not just higher-income consumers who shop at these department stores, making them vulnerable to the various headwinds facing consumers right now, Carter said.
“You have a customer who is strapped, you have a customer that also understands that the prices have gone up because of tariffs and so they’re being very cautious in terms of what they’re buying,” she said.
“The consumer is in the driver’s seat. And if they don’t decide that Saks is worth their share of wallet, Saks Global will be in trouble. And that will be Neiman Marcus, Bergdorf Goodman, Saks Fifth Avenue and Saks off Fifth, all of them.”
Jintak Han contributed to this report.
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