Saks Will Merge With Neiman Marcus Group: Report

The proprietor of Saks Fifth Avenue has acquired Neiman Marcus Group in a $2.65 billion deal, in response to a report in The Wall Avenue Journal.

Amazon helped finance the deal alongside present Saks traders, sources advised WSJ, which can lead to a brand new entity often known as Saks International. Saks proprietor HBC, or Hudson’s Bay Firm, and Amazon will each retain a minority stake within the new firm. Different minority shareholders embody Salesforce, the report mentioned.

It has been lengthy rumoured that HBC would purchase Neiman Marcus Group, which additionally owns Bergdorf Goodman in New York Metropolis. In response to the sources within the WSJ report, the 2 retailers collectively would generate $10 billion in annual gross sales.

Saks and Neiman Marcus have confronted a tricky retail panorama lately amid a softening within the luxurious sector and as customers have shifted their purchasing on-line or towards manufacturers immediately. Competitors from e-commerce platforms — which have encountered challenges of their own — additional diluted their share.

In 2020, Neiman Marcus filed for chapter however was capable of refinance its debt and emerged 4 months later with a playbook that prioritised its prime spenders. The next yr, HBC cut up Saks Fifth Avenue into two totally different firms, Saks.com and its brick-and-mortar footprint, elevating $500 million from enterprise capital agency Perception Companions. Each malls noticed swift restoration following the pandemic as customers indulged in “revenge purchasing” because the world opened up. However the growth didn’t final within the luxurious house.

As a mixed entity, which will probably be run by Saks CEO Mark Metrick, per WSJ, Saks and Neiman benefit from scale and effectivity. Collectively, their footprint totals greater than 170 places, together with Saks’ off-price outposts, Saks Off fifth. Participation from Amazon and Salesforce will increase their know-how infrastructure. However steep challenges within the retail sector stays.

“A merger doesn’t resolve all the problems, particularly these of the relevance of the chains in a market the place extra luxurious gamers are pushing direct to client gross sales,” Neil Saunders, managing director of GlobalData’s retail group mentioned in an announcement. “Even a mixed chain wouldn’t match the heft and energy of the worldwide luxurious conglomerates, which might nonetheless maintain many of the playing cards. As such, there’s a threat that the deal may find yourself creating a fair larger headache for Saks.”

In response to WSJ, the transaction has been permitted by the boards of each firms.