Saks Global files for bankruptcy amid luxury market strains

By Luciana Lopez, Nathaniel Meyersohn, CNN

(CNN) — Saks Global, the parent company of luxury retailer Saks Fifth Avenue, filed for Chapter 11 bankruptcy protection late Tuesday. The company had struggled with a heavy debt load following its purchase of rival Neiman Marcus in 2024.

Saks was in a precarious financial situation before its Neiman merger, and the combination of luxury department stores failed to drive enough efficiencies to overcome the company’s massive debt load.

The merger was also ill-timed, as Americans have shifted their retail habits in recent years away from big department stores. Some legacy retailers have struggled to keep up. Macy’s closed hundreds of stores in 2024, and Lord & Taylor went out of business in 2020.

Many shoppers have grown disillusioned with the luxury market in particular, complaining about higher prices for lower quality items. And those who are still shopping luxury are increasingly buying from the brands themselves in a direct-to-consumer strategy, cutting out middlemen like department stores.

An uncertain economy over the past year hasn’t helped, with consumer sentiment in the dumps, a slowing job market amping up anxiety and a majority of Americans blaming the White House for harming the economy, according to a recent CNN poll.

Saks struggled to pay its vendors, and in early January, Marc Metrick stepped down as CEO, reportedly after the company missed a large debt payment. Metrick handed the reins to Richard Baker, the Saks Global executive chairman.

Now Baker is stepping down as CEO, and former Neiman Marcus chief Geoffroy van Raemdonck will assume the post through bankruptcy proceedings.

“This is a defining moment for Saks Global, and the path ahead presents a meaningful opportunity to strengthen the foundation of our business and position it for the future,” said van Raemdonck in the Saks statement.

“In close partnership with these newly appointed leaders and our colleagues across the organization, we will navigate this process together with a continued focus on serving our customers and luxury brands. I look forward to serving as CEO and continuing to transform the Company so that Saks Global continues to play a central role in shaping the future of luxury retail.”

Saks Global was the product of a 2024 deal by Saks owner HBC to acquire Neiman Marcus for $2.65 billion. The goal was to establish a luxury behemoth that could take back some control from individual brands, negotiating for lower costs, while also drawing shoppers back to stores.

Instead, Saks reportedly struggled to pay vendors, straining those relationships and fanning worries about a possible bankruptcy months before the retailer filed for protection.

Saks’ purchase of debt-laden Neiman Marcus made bankruptcy the “likely destination” for the retailer, said retail analyst Neil Saunders in a note to clients Wednesday. He said that the “only real surprise has been the speed of the collapse,” which occurred roughly a year after the deal closed.

“The truth is that Saks Global put itself in a financially precarious position that undermined the day-to-day operations of the business,” wrote Saunders, managing director of GlobalData. “A lack of cash meant suppliers went unpaid, this created inventory gaps which then drove customers away and caused revenue and cash generation to plummet. This classic vicious spiral put the business in an unsustainable position.”

In its statement Wednesday, Saks Global said it had secured $1 billion of debtor-in-possession financing, which “will provide ample liquidity to fund Saks Global’s operations and turnaround initiatives.” The bondholder group also agreed to fund an additional $500 million in financing upon emergence of bankruptcy, it said.

This story has been updated with additional information.

CNN’s Jordan Valinsky contributed to this report.

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