US luxury retailer Saks weighs bankruptcy a year after raising billions for turnaround

NEW YORK – Saks Global Enterprises, facing limited options ahead of a more than US$100 million (S$129 million) debt payment due at the end of December, is considering Chapter 11 bankruptcy as a last resort, according to people with knowledge of the situation.

The struggling luxury retailer is also weighing additional ways to shore up liquidity, including raising emergency financing or selling assets, the people said.

Separately, some Saks lenders have held confidential talks in recent days to assess the company’s cash needs, according to other people familiar with the matter. Those discussions have focused on a potential debtor-in-possession loan, a form of bankruptcy funding.

The chain, which operates its flagship Saks Fifth Avenue stores along with Bergdorf Goodman and Neiman Marcus, reported a 13 per cent year-on-year drop in second-quarter revenue to US$1.6 billion in October. At the time, management also said it had been exploring the sale of a minority stake in department store Bergdorf Goodman to raise funds.

Saks raised billions of dollars from bond investors late in 2024 to finance a bold turnaround plan centred on the acquisition of Neiman Marcus, betting that scale would revive the company. Instead, the deal deepened the company’s debt burden and failed to resolve long-running issues with vendors, many of whom halted shipments amid missed payments, accelerating losses.

In June, Saks persuaded creditors to provide hundreds of millions of dollars more as part of a debt deal that reshuffled repayment priorities, creating multiple tiers of bondholders with differing claims on the company’s assets. Even those securities have since plunged, underscoring concern among investors that the turnaround effort is running out of time.

The tie-up with Neiman in 2024 was intended to create a multi-brand luxury giant powered by the technology of new high-profile investors, which included Amazon.com and Salesforce. But by May, bondholders were already facing paper losses of more than US$1 billion as the plan stumbled.

Following the restructuring, Saks in October cut its full-year guidance after reporting declining sales tied to inventory management challenges, while it continued to delay payments to some vendors to conserve cash.

Saks faces interest payments of more than US$100 million due on Dec 30, according to data compiled by Bloomberg. The US$941 million portion of Saks’ second-out notes restructured in August traded at about 7.5 US cents on the dollar on Dec 22, down from roughly 36 US cents two weeks earlier, according to Trace pricing. About US$762 million of more senior debt was quoted at around 48 US cents. BLOOMBERG