Luxury retail conglomerate Saks Global has secured $500 million in exit financing from its creditors and expects to emerge from bankruptcy this summer.
The New York-based company — parent of Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman — on Thursday said it has entered into a restructuring support agreement with an ad hoc group of its senior secured bondholders. They have committed to the exit financing.
Saks Global, saddled with debt from its $2.7 billion purchase of Neiman Marcus Group in December 2024, filed for Chapter 11 bankruptcy protection in January. Since then, it has been slashing its brick-and-mortar fleet. It shut nearly its entire Saks Off 5th chain and announced closings of two dozen Saks Fifth Avenue and Neiman Marcus stores. Later in March, Saks Global changed course and said it would keep one of the Neiman Marcus and two of the Saks Fifth Avenue stores open that it had planned to shut.
Now Saks Global said it will be well positioned to drive profitability with retooled finances, sufficient liquidity to invest in its long-term growth and an optimized store footprint that includes the best-performing stores in markets with a high concentration of luxury customers.
"As we advance the restructuring process and position Saks Global for the future, our focus remains on strengthening our brand partner relationships, and delivering an expertly curated product assortment and personalized service for our luxury customers across Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman," Geoffroy van Raemdonck, CEO of Saks Global, said in a statement.
But it remains to be seen if the changes that Saks Global has instituted will be enough to ensure the long-term survival of its three retailers, according to at least one retail analyst.
"So it seems like they've raised the money that they needed to keep going and give them some time to try to repair the business," David Swartz, a senior equity analyst at Morningstar Research Services, told CoStar News. "But it doesn't change the market dynamics that have caused the problems in the first place in terms of how luxury shoppers are shopping."
And the economic environment has in fact gotten worse, he said. The current situation with the war in the Mideast, oil prices and Wall Street's ups-and-downs are "probably not great for luxury department stores," according to Swartz.
He described Saks Global as remaining a troubled business.
"Obviously, it's a smaller business than it was before, but you can't exactly shrink your way into prosperity," Swartz said.
Saks Global didn't immediately respond to an email from CoStar News seeking comment on Swartz's remarks.
Last month Saks Global said its bondholders had approved its five-year business plan to exit Chapter 11 and that another $300 million of its $1.75 million in bankruptcy financing had been released.
In its statement Thursday, Saks Global said it plans to file a reorganization plan in the coming weeks.
"The company is focused on establishing the foundation to unlock the combined full potential of its three luxury banners, achieve double-digit adjusted EBITDA [earnings before interest, tax, depreciation and amortization] margin and drive sustainable growth," Saks Global said.
Since filing for Chapter 11, Saks Global said more than 650 brands resuming shipping merchandise to its chains, releasing $1.5 billion in retail receipts.
This new inventory has led to improved customer engagement, with a 6% increase in customer spend per store visit and significant improvements in full-price selling across Saks Global's luxury retail banners since the filing compared with the same period last year, according to the conglomerate.
For the record
Willkie Farr & Gallagher and Haynes and Boone are serving as legal counsel, PJT Partners is serving as investment banker, Berkeley Research Group is serving as financial adviser, and C Street Advisory Group is serving as strategic communications adviser to the company.
Paul, Weiss, Rifkind, Wharton & Garrison is serving as legal counsel, Lazard Frères & Co. is serving as investment banker, FTI Consulting is serving as financial adviser, and Kekst CNC is serving as strategic communications adviser to the Ad Hoc Group.