In this news:
Nearly five years ago I wrote that a Saks/Neiman Marcus merger seemed inevitable. I didn’t see this as an exciting development, but one largely driven by desperation and the need to consolidate market share in the face of the on-going luxury department store contraction.
Once the deal was finally announced, I took to these pages again to point out some of the significant challenges I anticipated the combined entities would face. In the months leading up to. and now beyond. the close, additional concerns have emerged.
SAN FRANCISCO, CALIFORNIA. A Saks Fifth Avenue store in Union Square, San Francisco, California. ... [+] (Photo by Robert Alexander/Getty Images)
Getty Images
Luxury Market Headwinds
Chief among these are that the North American luxury market more broadly--and Saks Fifth Avenue in particular--continues to face headwinds. While the uber-luxury customer keeps spending (see Hermes’ results), most of the luxury department store customer base is pulling back. Moreover, luxury department stores face powerful competition from the growing base of their own vendors’ stores and online sites, as well as online-only players like MyTheresa.
As my colleagues Pam Danziger points out in her recent Forbes piece, Saks Fifth Avenue performance appears to be particularly weak of late.
Payment Problems Loom Large(r?)
In December of 2023 Saks told vendors that “we have sufficient liquidity.” Yet throughout 2024 there was a lot of buzz about HBC and Saks’ issues paying vendors. But right before the deal closed, it seemed like the new capital structure of a combined Saks and Neiman’s would allow the newly formed Saks Global to get current with its vendor base.
