Roughly five months after it filed for bankruptcy protection, Saks Global is ready to emerge from Chapter 11 in a few weeks with a much smaller store footprint, about 75% less debt and a laser-sharp focus on luxury retail.
The New York-based upscale department store conglomerate — parent of Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman — on Friday said the U.S. Bankruptcy Court for the Southern District of Texas had approved its financial reorganization 11 plan. It remains on track to exit Chapter 11 in the coming weeks "with debt reduced by nearly 75% and a clear path toward profitable and sustainable growth."
Some 48 Saks Fifth Avenue and Neiman Marcus stores would remain open, at least initially, according to a list released by the company. Only 12 Saks Off 5th stores would remain, while some 62 are in the process of holding final sales or have been closed. The retailer's Bergdorf Goodman women's and men's stores would remain open as well.
The plan had gained support from participating creditors, the overwhelming majority of which voted in favor, according to Saks Global. It was confirmed by the court and will leave Saks Global with "a strengthened financial foundation," the company said.
At emergence, Saks Global said it will have the liquidity necessary to support its operations and invest in its future. The plan "establishes the foundation for the company to accelerate sales growth, with a focus on strong full-price selling, and to generate $9 billion in total gross merchandise value and double-digit adjusted EBITDA by fiscal year 2030," according to Saks Global, referencing a financial metric that measures a company's profit before certain extra costs are counted.
"With significantly reduced debt on the company's balance sheet at emergence and having already achieved substantial cost savings through the optimization of our footprint, operations and organization, our business is well positioned for future success," Brandy Richardson, chief financial officer of Saks Global, said in a statement.
The company closed roughly two dozen Saks Fifth Avenue and Neiman Marcus stores and shut down much of its off-price Saks Off 5th chain — roughly 60 stores — since filing for bankruptcy protection in January.
The Saks Global portfolio has ended up with nearly double the number of Neiman Marcus stores, 33, compared to Saks Fifth Avenue, with 15 remaining. And in its list of "post-emergence" stores, Saks Global cautioned that it "is always evaluating its store footprint and may find it necessary to close a store in the future."
It has announced the Saks 5th Avenue and Neiman Marcus closings in a piecemeal fashion. In February, it identified eight Saks Fifth Avenues and one Neiman Marcus it planned to shutter. In March, it added 12 more Saks Fifth Avenue stores and three Neiman Marcus locations to the closing list. Then in a turnaround later that month, Saks Global said it would actually keep two of the Saks Fifth Avenue and one Neiman Marcus store on the closing list open.
And just earlier this week, Saks Global announced it was shuttering its flagship store in downtown Dallas.
For the record
Willkie Farr & Gallagher and Haynes and Boone are serving as legal counsel, PJT Partners LP 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 Saks Global.
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 of the company's senior secured bondholders.