Saks Fifth Avenue’s parent company buys Neiman Marcus for $2.65 billion

NEW YORK — The parent company of Saks Fifth Avenue has signed a deal to buy upscale rival Neiman Marcus Group, which owns Neiman Marcus and Bergdorf Goodman stores, for $2.65 billion.

The new company, called Saks Global, will create a luxury powerhouse, an arena that has become increasingly fragmented with various players, from online marketplaces selling luxury goods to high-end fashion and accessories brands opening their own stores.

The new organization will include the Saks Fifth Avenue and Saks OFF 5th brands, Neiman Marcus and Bergdorf Goodman, as well as the real estate assets of Neiman Marcus Group and HBC.

Stores will continue to operate under their own brand names.

HBC has secured $1.15 billion in financing from investment funds and accounts managed by subsidiaries of Apollo, and a $2 billion fully committed revolving asset-based credit facility from Bank of America. Wells Fargo.

The deal was announced Thursday after the two department store chains had been in talks for about a year. But the twist is Amazon’s minority stake, which adds “a little spice” to an otherwise expected deal, says Neil Sanders, managing director of Global Data. Amazon will work with Saks Global to provide its expertise in logistics and personalization technology. Salesforce, the cloud-based software powerhouse, will become an investor in the closing.

The Wall Street Journal first reported the impending deal on Wednesday.

“For many years, many in the industry have anticipated this transaction and the benefits it will bring to customers, partners and employees,” HBC Executive Chairman and CEO Richard Baker said in a statement. “It’s an exciting time in luxury retail. Technological advances are creating new opportunities to redefine the customer experience, and we look forward to unlocking significant value for our customers, brand partners and employees.”

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Mark Metrick, CEO of Saks’ e-commerce business, will become CEO of Saks Global. Consumers are increasingly demanding more access to designer products, easier ways to shop and more personalized experiences, he told The Associated Press in a phone interview Thursday.

“This type of combination is the next move to put Saks, Neiman Marcus and Bergdorf Goodman where consumers need to be,” he said.

Both Saks and Neiman Marcus struggled as shoppers pulled back on high-end products and shifted their spending toward experiences like travel and upscale restaurants. Both iconic luxury purveyors have faced stiff competition from luxury brands that are increasingly opening their own stores.

The deal will help reduce operating costs and create more negotiating power with vendors. The new company will have greater financial flexibility and will provide better access to buyers, especially up-and-coming designers. Shoppers will see more personalization of their experiences through the advanced use of artificial intelligence, Metrick said.

Saks Fifth Avenue currently operates 39 stores in the United States, including its Manhattan flagship. In early 2021, Sax rotated its website As a standalone company with hopes of expanding that business at a time when more people are shopping online.

Neiman Marcus Filed for bankruptcy protection But in the first months of the coronavirus pandemic in May 2020 emerged In September of that year. Like many of its peers, the privately held supermarket chain was forced to temporarily close its stores for several months.

Meanwhile, other department stores are under pressure to increase sales.

Storytelling Lord & Taylor It was announced in late August 2020 that it was closing all of its stores after filing for bankruptcy earlier that month. It works online. Macy’s In February this year, it announced it would close 150 non-performing name stores over the next three years, including 50 by the end of the year.

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Consumers are resilient and proven Ready to shop Even after inflation, attitudes changed with some Americans Trade down For low cost items.

A deal between the two luxury retailers won’t solve all the problems, especially when high-end shoppers want to buy luxury goods online or at the luxury brands’ own stores, Sanders said.

“As a big company, the negotiating power with the brands is a little better, but even an integrated chain can’t match the strength and power of global luxury companies, which still hold most of the cards,” Saunders said. “As such, the deal risks creating an even bigger headache for the Sox.”

Sanders noted that Amazon’s stake in the business makes sense as it has ambitions to play more in the luxury arena. Sanders said Amazon could leverage its ability to streamline logistics and e-commerce, creating an advantage for the new company in a market increasingly focused on online shopping. said.

Saks Global will include HBC’s US real estate assets and Neiman Marcus Group’s real estate assets, creating $7 billion of retail real estate assets in high-end luxury shopping destinations. Ian Putnam, currently president and CEO of HPC Properties and Investments, will become CEO of Sachs Global Properties and Investments, which manages the company’s portfolio of properties.

Both Metrick and Putnam will report to Baker, who will serve as executive chairman of Saks Global.

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