Saks owner buys Neiman Marcus in $3.6 billion deal, creating luxury retail giant
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The merger comes at a time when luxury retailers are grappling with slowing demand.
PHOTO: NYTIMES
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New York - The parent of Saks Fifth Avenue has agreed to buy rival Neiman Marcus in a US$2.65 billion (S$3.6 billion) deal, creating the ultimate high-end department store behemoth, the companies announced on July 3.
The deal, which had been rumoured since Neiman Marcus filed for bankruptcy protection during the Covid-19 pandemic, comes just over four years after Saks bought the licence for the Barneys name following the bankruptcy of that group. It also follows a wave of luxury e-tail failures, including those of FarFetch and Matches.com.
Saks is owned by HBC, which also owns Canadian department store chain Hudson’s Bay and Lord & Taylor.
The acquisition of Neiman Marcus makes Saks Global, as the new group will be called, the dominant player in its market, with a combined 75 stores (including two Bergdorf Goodman locations), as well as 100 off-price outlets.
The new group’s only real rivals in the US will be Macy’s, which also includes Bloomingdale’s and Nordstrom. It will be run by Mr Marc Metrick, the current chief executive of Saks and Saks.com.
The companies said they planned to invest in technology, including artificial intelligence, as well as legacy and emerging brands.
The two retailers have long been viewed as potential matches, given their overlapping customer bases of high-end customers. But each has struggled financially, posing significant complications for their efforts to combine over the years.
What may have helped seal the deal is some help from Amazon, which is taking a minority stake in Saks Global.
Although the merger gives the combined high-end retail entity stronger negotiating power with small luxury brands, the chain would not match the heft and power of the global luxury conglomerates, which will still hold most of the cards, said Mr Neil Saunders, managing director at retail consultancy GlobalData.
“There is a risk that the deal might end up creating an even bigger headache for Saks,” Mr Saunders said.
The most coveted high-end brands such as LVMH have their own robust store networks.
Amazon enters luxury world
A minority stake in the combined company sets up Amazon to gain a foothold in the luxury market that has seen a steady demand from a higher-income consumer base.
Mr Saunders said: “Amazon taking a stake in the business would make sense, as it has ambitions to play more heavily in the luxury space, and this would give it a toehold.”
The Journal said there were no plans to close stores after the deal is completed. There are 39 Saks Fifth Avenue stores and 95 Saks Off 5th discount stores. Saks.com operates as a separate business that is owned by HBC.
Neiman has 36 department stores, two Bergdorf Goodman stores and five Last Call discount stores. There are eight malls that have both a Saks Fifth Avenue and Neiman Marcus store, according to Green Street, a real-estate research firm. NYTIMES, REUTERS
