Can Saks Global Be Fixed? 

Geoffroy van Raemdonck and team are on a rescue mission. 

And they’re going to have to move fast and step right if they want to succeed in pushing Saks Global not just through bankruptcy, but back out as a viable business. 

Van Raemdonck stepped in as the new chief executive officer of Saks Global late Tuesday, having taken the reins from Richard Baker just before the company filed for bankruptcy. And he brought with him a couple luxury veterans, including Darcy Penick, now president and chief commercial officer of Saks Global overseeing Saks Fifth Avenue and Neiman Marcus Stores, marketing, brand partnerships, buying, digital, analytics and customer care, and Lana Todorovich, chief of global brand partnerships. Meanwhile, Paolo Riva, chief buying officer of Neiman’s, and Tracy Margolies, president of Bergdorf Goodman, continue in their positions.

But the challenges are many. 

Saks Global loaded up on debt to buy Neiman Marcus Group for $2.7 billion, saddling the company with too much debt as vendors were repeatedly disappointed, waiting on the promise of getting paid for their past-due invoices. 

A year or more of broken promises — and now a bankruptcy — will make it hard for the retailer to win back the designer brands that feed its business. And van Raemdonck, a former Neiman Marcus chief, will also have to wrestle with a business model and operating structure at Saks Global that’s in major flux, some tough sailing in luxury generally and continuing questions about the future of the department store. 

Think of it as the next season of the Saks Global drama, where the characters are changing and much of the action will take place in a Texas federal bankruptcy court.  

Even as Saks Global filed for Chapter 11, van Raemdonck was hard at work trying to convince brands to stick with the retailer for the ride through bankruptcy. In a letter to vendors, the CEO explained the meaning of bankruptcy — stressing the stores remain open and continue to serve customers — and that the process will enable it “to strengthen our balance sheet, simplify our capital structure, and position the company for continued long-term leadership in luxury retail in service of brands and customers. We anticipate emerging from Chapter 11 as a stronger company later this year.”

The key to that, he stressed, will be getting merchandise. Van Raemdonck said payments going forward will depend on when goods are shipped. Products shipped after Jan. 13 are known as “post petition” obligations that receive priority payment status. “Going forward, we will pay vendors in the ordinary course of business for authorized goods and services rendered on a ‘post-petition’ basis,” he wrote. 

“Our partners are vital to our success and play an important role in our ability to deliver for customers,” the CEO added. “As we strive to be great partners, we are focused on delivering exceptional products, elevated experiences and highly personalized service to our customers. While we don’t have all of the answers today, addressing questions regarding outstanding payables remains a priority. We are committed to continued dialogue with you and will share additional information as it becomes available.”

The Future of American Department Stores

How vendors react to the bankruptcy — and how the court decides — will shape the very future of the American fashion scene and its players. 

“It’s not clear whether Saks can be fixed, but I do believe that Saks should be fixed,” said attorney Bradford Sandler, a bankruptcy veteran at Pachulski Stang Ziehl & Jones. 

“The way to fix Saks is not just through a financial turnaround, but also a critically important operational turnaround because the damage with the brands has been so significant that, absent repairing that relationship, the brands could actually end up causing Saks to liquidate. Many of the brands want Saks to survive, but not at any price,” he said.

And vendors that are feeling burned might need a little coaxing, even if many of the designers have few easy alternatives to fill the Saks Global-sized hole in their business. 

Sandler said that a vendor shipping Saks Global today is still not guaranteed payment — although financing secured to get the retailer through bankruptcy will help.  

“If I were a brand, I would want some type of real assurance that I was going to get paid,” Sandler said. “And one of the ways that they can certainly show goodwill is they have a combined critical vendor program. And if you look at what they want to spend on foreign creditors, 503 claimants, and others in the aggregate, it’s about around $400 million. They should spend every penny of it.”

That could certainly be welcomed by the industry. 

Mark Weinsten, who is now chief restructuring officer at Saks Global, argued in court papers that the Saks Global business can still work — if properly fueled.  

“Company data indicates that when stores have inventory, the inventory sells,” Weinsten contended. “Significant capital expenditures or investment in marketing dollars are not required to redirect the company’s business trend.…The concession business has recorded positive comparable sales each month [recently], with results ranging up 2 percent to 18 percent year-over-year.”

Saks Global has also trimmed its cost base considerably, achieving $200 million in annual synergies by bringing together the Saks and Neiman’s businesses. 

It is also using one unified merchandising platform, which Weinsten said “allows its teams to buy and sell inventory across Saks Fifth Avenue and Neiman Marcus to optimize inventory buys and allows allocation of inventory across all of its luxury retail brands.”

“This unlocks significant margin potential by allowing the company to maximize its working capital efficiency,” he said. “Sellers at all three of the luxury banners will benefit, with the ability, with vendor permission, to offer customers merchandise from across the entire network in the future.”

That optimism comes with one really big “but.”

Weinsten said Saks Global needs “debt relief and substantial additional funding to take advantage of these positive indicators.”

But retail experts watching from the sidelines see a picture that’s more complicated — not just the matter of a retailer that simply took on too much debt.

“Right now, you have a broken model,” said one retail industry retail veteran. “Fifteen to 20 percent is concession, but the company is still staffed for buying wholesale. They’ve got to decide what they want to be and where they’re headed.” 

If they go deeper into concession: “They’ve got to focus on the big cities because you can’t be a concession business in a small city. You don’t do enough volume. Clearly they will shut down a lot of stores. The company also has to figure out how to take less risk. They’ve been owning too much merchandise, taking too many markdowns.”

One former retail CEO experienced in bankruptcy said Saks Global would have to be very careful as it works to regain vendor trust. 

“Communication is critical,” the former CEO said. “The better they communicate with the vendor community, the better off they will be. They need to tell them when they are going to get paid and start replenishing the stores which are depleted of spring goods. There needs to be a real focus on the strategy and to communicate that, but I don’t know if there is a strategy there yet.”

One former Saks executive said the company has to get inventory flowing again and stabilize the top line. 

“Geoffroy has to get out and break bread with vendors, extend some olive branches,” he said. “I was shocked when I saw Chanel was owed $136 million. There’s $700 million owed to top vendors. It will be written off. Vendors will take haircuts. They can’t make them whole. But the number-one priority is to get vendors back in their camp.” 

It’s too early to tell what kind of recovery vendors will get. That will be a negotiation through court. Many are owed millions of dollars, and most are likely to get only a few cents on the dollar. 

Critical vendors typically get better recoveries. 

“The good news is that they are up against sh—y numbers,” the former Saks executive said. “Also, there are receipts out there manufacturers are holding. Maybe Saks Global can negotiate for them at a discount. They have to focus on getting stuff back on the shelves, but vendors have a horrible taste in their mouths. Saks is really going to be late with summer and fall deliveries.

“Right now, Saks is an absolute mess. They overpaid for Neiman’s, business was performing poorly even before they bought Neiman’s. When they tried to put them together, the whole model would have succeeded if the sales volume was sustained and they were able to get the $600 million in costs out of the business through synergies. But business was soft, got softer, and when that happened that put further pressure on cash flow, and couldn’t take enough costs out and get the synergies to offset that,” the former executive said. “With the topline down double digits, they continued to burn through cash. [Richard Baker] did some Hail Marys, raised $600 million, but that was too little, too late. So it became inevitable to go bankrupt. Now, lenders took control and put in the new management.”

It’s unclear how far along integrating the operations of Saks and Neiman’s is, since Saks Global purchased Neiman’s in December 2024. It’s clearly a complicated process. The company is in the early phase of a retail management system integration of Saks and Neiman’s. The process has been disruptive in the vendor community, but will enable sharing of merchandise information between the retail divisions, potentially leading to better sales and service to customers. 

At saks.com, every visitor who logs in has a personalized homepage. That level of personalization has to be brought to the Neiman’s and Bergdorf’s websites through one harmonized consumer data platform.

“A lot of corporate overhead work was done, but they need to stabilize the buying and marketing organization, and integrate the loyalty program, which is complicated,” said the ex-Saks source. Blending two loyalty programs into one would enable points earned through Saks purchases to be applied to Neiman’s purchases, and vice versa.

In addition, a “Seller Success Track” program elevating incentives for stylists and selling associates began rolling out last November and was expected to be fully rolled out to all selling associates this year. The program is designed to motivate associates to sell more merchandise, provide tools to improve their selling skills, identify career paths as workers achieve certain goals, and make customers feel they’re getting better service and more personal attention.

And there is also a big opportunity to better curate merchandise at Saks Fifth Avenue stores. The stores for seasons have appeared lackluster, and need focused assortments with a point of view.

Different — and Smaller

Regardless, the Saks Global that emerges from bankruptcy — if that is in the cards — will be a different and likely smaller company.  

Industry sources expect a dramatic rationalization of the store base. In markets or malls where Saks Fifth Avenue and Neiman Marcus both have stores, one could close. There are 33 Saks Fifth Avenue stores, 36 Neiman Marcus stores, two Bergdorf Goodman doors, and a few Last Call stores. The company also operates the Horchow catalogue business as well as the Saks Off 5th off-price concept.

One insider previously told WWD that the plan would entail closing at least a total of 20 Saks and Neiman’s stores, with the bulk being Saks units. There are eight shopping centers where Saks Fifth Avenue and Neiman Marcus both operate, including the Houston Galleria, Town Center at Boca Raton, Bal Harbour Shops in Miami and The Somerset Collection in Troy, Mich. Also, Saks and Neiman’s operate near each other in Beverly Hills. 

According to sources, among Saks Fifth Avenue’s weaker locations are those in St. Louis; Las Vegas; East Rutherford, N.J.; Huntington Station, Long Island; Raleigh, N.C.; Birmingham, Ala.; San Antonio, Austin and downtown Dallas, Texas; Beachwood and Columbus, Ohio; Tulsa, Okla.; Orlando and Boca Raton, Fla., and South Coast Plaza, Costa Mesa, Calif.

However, Saks is said to have healthier stores in Houston; Naples and Sarasota, Fla.; Tysons Corner, Va; Beverly Hills; Philadelphia; Boston; Chevy Chase, Md; Bal Harbour, Fla.; Atlanta, and Manhattan.

Neiman’s top stores include locations in Northpark, Dallas; Beverly Hills, Newport Beach and San Francisco, Calif.; Atlanta; Chicago, and Houston. Neiman’s has a more curated audience and a stronger team of selling associates. The weaker Neiman’s units are said to be in San Diego and Palo Alto, Calif.; Denver, and Tampa Bay.

One source said that when a store gets closed, “hopefully they transfer some of that volume to the other store that stays open. I think it’s a safe objective that you model for 30 to 40 percent of the volume to be transferred.”

It is also believed that as many as 50 Saks Off 5th stores could close, which is more than half the off-price chain’s brick-and-mortar fleet.

“I’m sure they will rationalize the store base, but most of the business will stay intact, particularly the bigger stores and the websites,” predicted one supplier.

One former Neiman Marcus executive said, “If I was running Neiman Marcus, I would make sure to  build a dominant catalogue business, though it’s not as profitable as the store business because of the returns and delivery costs, it could still be twice the size. Neiman Marcus always had a great catalogue business.”

Most sources believe that the Saks, Neiman’s and Bergdorf nameplates will be retained, while Horchow could be sold off, though Neiman’s and Saks must be sharply differentiated. A minority stake in Bergdorf’s was up for sale last year, but some saw that as less likely now with new bankruptcy funding. 

One luxury retail veteran suggested dropping either the Saks or Neiman Marcus nameplates, after closing one of the stores in markets they share. “I would go with one name that could be the absolute dominant upscale retailer in the U.S. You could put all of your focus on one luxury nameplate. Remember, the upscale luxury market is not a huge market in the U.S. You don’t need two names to run 70 stores. Also, a lot of the big brands have their own shops.”

“Neiman’s is very upscale, has a clear identity, but Saks is all over the place. [Former CEO] Marc Metrick who was running Saks is an operating guy,” claimed the former Neiman’s executive. “He wasn’t the type of guy who could walk the selling floors, look at the merchandise, and figure out what to do. He suffered from not having a vision of his customer and his competition. Geoffroy, at least, knows Neiman’s. When he joined Neiman’s, he had never run a company. He did some good things, but I don’t believe that you can do the right thing when you are in New York and going down to Dallas once a month. You have to be able to pay close attention to what the buyers are onto.” Van Raemdonck allowed many of his team to work remote and periodically get together in Dallas for meetings.

Another former CEO of a major retailer asked the question that people in the Saks Global orbit have been avoiding: “Does the world really need Saks and Neiman’s?” he asked. 

The former CEO said the former management team of Saks Global “came close to destroying the business. But it takes a lot to destroy a department store. The big question is how are they going to get the vendors to trust them again?” he asked. “If I’m a vendor and you’re asking me to ship you but you still owe me $3 million, why would I do that?”

That’s a question that many will be asking themselves. 

Still, it’s a new day for Saks Global and there’s hope that the business will improve. 

“I am encouraged that there is now positive momentum around the situation,” said Brendan Hoffman, CEO of the Vince contemporary fashion brand. “Bringing Geoffroy back is also very positive. I’m confident and hopeful we will establish a strong partnership going forward.”

As Saks Global just proved, multibrand retailers live and die on strong partnerships.