Saks Global has reversed its decision to close three stores in areas with high concentrations of luxury shoppers, part of two dozen planned Saks Fifth Avenue and Neiman Marcus shutdowns, after discussions with mall landlord Simon Property Group.
The New York-based luxury retail conglomerate on Tuesday said it now intends to keep operating the Saks Fifth Avenue stores at The Gardens on El Paseo in Palm Desert, California, and The Mall at University Town Center in Sarasota, Florida. It will also retain the Neiman Marcus at The Westchester mall in White Plains, New York, as part of its go-forward store footprint.
Those three stores will "remain open following recent productive conversations with our landlords and further evaluation," Saks Global said in an email to CoStar News.
"Our approach to optimizing our store footprint remains centered on ensuring we focus our presence in markets with a high concentration of luxury shoppers where we can operate at an attractive level of profitability," Saks Global said. "We look forward to continuing to serve customers in these markets."
Indianapolis-based giant mall owner Simon Property is Saks Global's landlord for the three stores, as it owns the Palm Desert, Sarasota and White Plains retail centers.
Saks Global filed for Chapter 11 protection in January and as part of that process has been slashing its brick-and-mortar fleet to cut costs. The company has made two announcements of closings of its luxury chains, adding up to 20 Saks Fifth Avenue and four Neiman Marcus stores.
The three locations that Saks Global has decided to keep open were named on March 6 and scheduled to go dark in May. Saks Global is also pulling the plug on nearly its entire off-price Saks Off 5th chain.
Retail consultant Rudy Milian isn't involved in the Saks Global bankruptcy, but he isn't surprised by the company's decision to keep stores open that it announced it was closing. Retailers that file for Chapter 11 gain significant leverage to "reject" or "assume" leases, according to Milian.
"They typically petition the court to close more stores than they intend to with the goal of using leverage with their respective landlords to get rent concessions and other leasehold advantages as a condition to assume the lease with newly agreed to favorable modifications," he said in an email to CoStar News. "Saks Global is no different, and I am assuming [it] is in the process of negotiating with landlords on the leases they want to keep including Off 5th locations."
Milian described Saks Global's decision to keep the Neiman Marcus store in White Plains open as a "a no-brainer," since The Westchester mall "is widely considered the premier luxury mall in the Hudson Valley and one of the most upscale shopping destinations in the New York metropolitan area."
The tenant roster there includes Burberry, Gucci, Louis Vuitton, Salvatore Ferragamo, Tiffany & Co., David Yurman, Rolex and Apple, according to Milian.
"Saks Global would be foolish to close its store and risk losing that affluent customer," he said. "So, to make a deal with Simon, Saks Global's bluff was putting the store on the closure list, signaling it was willing to walk away."
And rather than risk a "a massive, multi-floor vacancy in one of its premier luxury malls," Simon Property likely "offered significant rent concessions or more favorable lease terms that could flip the store's profitability from red to green," according to Milian.
Simon Property didn't respond to an email from CoStar News seeking comment on Tuesday. Neither did Saks Global respond to an email specifically asking for a response to Milian's comments.
This isn't the first time that Saks Global has announced it was closing a store and then reversed course. A year ago, the company said it would keep its flagship Neiman Marcus in downtown Dallas open after saying it planned to shut the location. Saks Global's reversal followed an outcry and pleas from local officials.
At the time, Saks Global said it intended to reimagine the historic nine-story building where Neiman Marcus has been operating for a century through a collaboration with the city of Dallas. Potential options to reimagine the space included offering a luxury retail experience, a curated art exhibition, a fashion and event center, as well as an incubator for fashion design and manufacturing.
Simon Property is Saks Global's biggest landlord, with the retail company having about 75 leases with the real estate investment trust. The two businesses have other relationships, as well. For example, Saks Global invested $100 million to help fund HBC's $2.7 billion acquisition of Neiman Marcus Group in December 2024. The merged company was then named Saks Global.
As part of the bankruptcy proceeding, and in a contentious dispute, Simon Property is asking the court to approve the termination of Saks Global leases for a Neiman Marcus store in Palo Alto, California, and a Saks Off 5th at the Woodbury Commons Premium Outlets in Central Valley, New York.
In court filings, Saks Global is opposing the REIT's attempt to take back the two stores' space. It argues that the landlord is trying to profit by re-leasing those stores to other tenants at higher rents. Saks Global claims that if it is forced out of those locations, it won't have the option of selling those leases itself to help repay its creditors.