The parent company of Saks Fifth Avenue to buy Neiman Marcus for $2.65 billion
Saks Fifth Avenue’s mother company Saks Fifth Avenue has signed an agreement to purchase an high-end rival Neiman Marcus Group. The group includes Neiman Marcus along with Bergdorf Goodman stores, for $2.65 billion. The online giant Amazon holds an interest in the majority of
By ANNE D’INNOCENZIO AP Retail writer
Jul 04, 2024 09:10 PM
YORK Saks Fifth Avenue’s parent firm Saks Fifth Avenue has signed an agreement to purchase the upscale competitor Neiman Marcus Group. It operates Neiman Marcus, as well Bergdorf Goodman stores, for $2.65 billion, with the online giant Amazon holding the majority stake.
The new business will be referred to under the brand name Saks Global, creating a powerful luxury company at a time that the market has become ever more fragmented by different companies, from online marketplaces that sell luxury goods to fashion and accessory brands that are creating boutiques that they own.
The company’s new name will encompass the brands mentioned above, such as Saks Fifth Avenue as well as those of the Saks Off 5TH brand names, Neiman Marcus, and Bergdorf Goodman along with the real estate properties belonging to the Neiman Marcus Group and HBC Holding Company, a holding company which bought Saks in the year 2013.
Stores will be under the brand names they own.
HBC has secured $1.15 billion in financing from investment funds, as well as accounts operated through Apollo’s affiliated companies Apollo and Apollo Investments. The investment is $2 billion which is fully committed to revolving asset-based revolving loans provided through Bank of America, which is the principal underwriter. Citigroup, Morgan Stanley, RBC Capital Markets, and Wells Fargo.
The announcement was made on Thursday, just after that the department store chains had been engaged for about one an year. The twist is that Amazon holds a minor share in the deal, which provides “a bit of spice” to an arrangement that was not planned according to Neil Saunders, managing director of GlobalData which is a research and development company. Amazon will join forces along with Saks Global to offer its expertise in logistics and personalization technological innovation. Salesforce is an online-based software company that will also be an investor after the close.
The Wall Street Journal first made the announcement the deal on Wednesday.
“For years, many in the industry have anticipated this transaction and the benefits it would drive for customers, partners and employees,” stated Richard Baker, HBC executive chairman and CEO in a press release. “This is the most exciting time in luxury retail thanks to technological advances that are creating new opportunities to transform the customer experience. we are looking ahead to unlocking tremendous value for our brand partners, employees. “
Marc Metrick, who is the chief executive officer of Saks E-commerce and will be the president for Saks Global. Metrick was quoted by The Associated Press on Thursday in a call interview. He said that said consumers are looking for fashionable products, quicker ways to shop and more individualized experiences.
“This type of combination was the next move to make in order to put Saks, Neiman Marcus and Bergdorf Goodman where they need to be for the consumer, ” the official explained.
Both stores Saks and Neiman Marcus are facing difficulties as shoppers have shifted away from buying expensive products and have shifted their attention to things like dining out or travelling. These two famous luxury stores are confronting stiff competition from luxury brands, which are opening stores in increasing numbers.
The acquisition is expected to reduce operating expenses, and also give the company greater negotiation capabilities with suppliers. The new company will enable customers to gain access to new designers, as well as new ones, since it has more flexibility in its finances. Customers will also experience experiences that are more personalised thanks to enhanced usage of artificial intelligence, Metrick said.
Saks Fifth Avenue has has 39 stores in its stores throughout all of the U.S., including its Manhattan flagship store. In the early 2021s, Saks had a break with the site into a separate entity, with the aim of grow the business in the time when more people were shopping online.
Neiman Marcus filed for bankruptcy protection in the month of May, 2020, during the beginning stage of coronavirus pandemic however, was first discovered in September of that identical time. Similar to the majority of its competitors, the privately-owned department stores, it was forced to temporarily close the stores it operated for couple weeks.
In contrast, other department stores are under pressure to sell more.
Storied Lord & Taylor announced in August that it will shut down its stores following declaring bankruptcy earlier in the month. The company is still in its online store. Macy’s revealed in the month of February that they were planning to close 150 of its flagship stores that aren’t producing within the coming three years, and include 50 by the time year’s end comes around.
Consumers have shown resiliency and are eager to buy despite a time of rising prices. But, consumer habits have changed as certain Americans shifting to lower-priced goods.
A deal between two luxury retailers won’t resolve all issues, especially when customers who are high-end want to purchase luxury goods through online shopping or boutiques run by a luxury brand, Saunders added.
“As a larger entity, negotiating power will be a little better with the brands, but even a combined chain would not match the heft and power of the global luxury conglomerates, which would still hold most of the cards,” Saunders declared. “As as such there’s a possibility that the deal will create more problems for Saks. “
Saunders claimed that Amazon’s involvement in the industry is logical since it is looking to expand its footprint in the world of luxurious. Saunders added that Amazon could use its influence to boost efficiency in the logistics of e-commerce and logistics, and give the company’s new venture in a time when shopping online has gained importance for consumers, especially younger buyers and both retailers must be able to attract the younger customers as he said.
Saks Global will also comprise the HBC’s U.S. real estate assets as well as Neiman Marcus’ property holdings. This will result of an investment portfolio of $7 billion worth of real property assets for retail that are situated in shopping centers that are of the highest caliber. Ian Putnam who is the current chief executive officer and president for HBC Properties and Investments, is appointed CEO of Saks Global Properties and Investments who will manage all assets held by the company.
Two Metrick Putnam as well as Metrick Putnam will report the to Baker and Baker will be the executive chairman of Saks Global.
