The owner of Saks Fifth Avenue has acquired Neiman Marcus Group in a $2.65 billion deal, according to a report in The Wall Street Journal.
Amazon helped finance the deal alongside existing Saks investors, sources told WSJ, which will result in a new entity known as Saks Global. Saks owner HBC, or Hudson’s Bay Company, and Amazon will both retain a minority stake in the new company. Other minority shareholders include Salesforce, the report said.
It has been long rumoured that HBC would acquire Neiman Marcus Group, which also owns Bergdorf Goodman in New York City. According to the sources in the WSJ report, the two retailers together would generate $10 billion in annual sales.
Saks and Neiman Marcus have faced a tough retail landscape in recent years amid a softening in the luxury sector and as consumers have shifted their shopping online or toward brands directly. Competition from e-commerce platforms — which have encountered challenges of their own — further diluted their share.
In 2020, Neiman Marcus filed for bankruptcy but was able to refinance its debt and emerged four months later with a playbook that prioritised its top spenders. The following year, HBC split Saks Fifth Avenue into two different companies, Saks.com and its brick-and-mortar footprint, raising $500 million from venture capital firm Insight Partners. Both department stores saw swift recovery following the pandemic as consumers indulged in “revenge shopping” as the world opened up. But the boom did not last in the luxury space.
As a combined entity, which will be run by Saks CEO Mark Metrick, per WSJ, Saks and Neiman have the benefit of scale and efficiency. Together, their footprint totals more than 170 locations, including Saks’ off-price outposts, Saks Off 5th. Participation from Amazon and Salesforce will boost their technology infrastructure. But steep challenges in the retail sector remain.
“A merger does not resolve all the issues, especially those of the relevance of the chains in a market where more luxury players are pushing direct to consumer sales,” Neil Saunders, managing director of GlobalData’s retail team said in a statement. “Even a combined chain would not match the heft and power of the global luxury conglomerates, which would still hold most of the cards. As such, there is a risk that the deal might end up creating an even bigger headache for Saks.”
According to WSJ, the transaction has been approved by the boards of both companies.