In a dramatic strategic shift, Saks Global has announced it will close the majority of its discount store locations to concentrate resources on its core luxury retail business. The move comes as the parent company of Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman navigates Chapter 11 bankruptcy protection filed earlier this month.
Massive Discount Store Closures Announced
The restructuring will see 57 of the 69 Saks Off Fifth discount locations permanently shuttered, leaving just 12 stores operational. Additionally, all five Last Call discount shops will close their doors permanently. Closing sales are scheduled to begin on January 31st, offering bargain hunters significant discounts on remaining inventory.
Online Platform Shutdown and Major Discounts
Earlier this week, Saks Global confirmed it would permanently close the Saks Off 5th e-commerce platform, where a clearance sale is already in progress. Some items available online are currently discounted by as much as 90 percent, with the website set to cease operations once remaining stock is sold. Similar substantial discounts are expected in physical stores during the liquidation process.
Bankruptcy-Driven Restructuring
The store closures represent the latest development following Saks Global's Chapter 11 bankruptcy filing on January 14th. The company carries substantial debts and requires significant cost-saving measures to stabilise its financial position. Retail experts note that Chapter 11 proceedings often allow retailers to exit expensive lease agreements and restructure operations.
Geoffroy van Raemdonck, Chief Executive of Saks Global, emphasised that these changes form part of a broader effort to realign the company around its core luxury business. The moves are designed to sharpen our focus on full-price luxury brands, company executives stated.
Remaining Operations and Customer Information
The twelve Saks Off Fifth stores that will remain open will primarily function as outlets for selling excess inventory from the full-price luxury stores: Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman. This represents a significant shift from previous operations, where the discount chain sourced specially purchased discounted stock.
Customers can continue using gift cards through February 14th, and stores will process returns and exchanges for purchases made before Saturday. Any remaining rewards linked to store credit cards can be redeemed until March 1st. The company has stressed that Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman stores, along with their e-commerce platforms, will continue normal operations.
Industry Context and Competitive Landscape
Saks Off 5th and Last Call have traditionally competed in the off-price retail sector against established rivals including Nordstrom Rack and TJ Maxx. The decision to dramatically scale back these discount operations reflects a strategic pivot away from this competitive market segment.
Neil Saunders, a retail analyst at GlobalData, commented on the rapid developments: The debt-fueled acquisition of Neiman Marcus always made bankruptcy a likely destination for Saks Global. The only real surprise has been the speed of the collapse, which has come barely a year after the deal closed.
Historical Challenges and Recent Struggles
The iconic retailer, founded in 1867 by Andrew Saks, has faced mounting challenges in recent years. The company never fully recovered from the COVID-19 pandemic as online competition intensified and luxury brands increasingly shifted sales to their own direct retail channels. Last year, Saks Global struggled to pay suppliers, prompting some vendors to withhold inventory.
The current crisis represents a dramatic reversal for a retailer that, just last year, launched an ambitious comeback plan centred around its $2.7 billion acquisition of rival Neiman Marcus. The deal has failed to deliver the anticipated benefits for either retailer, with both chains closing flagship locations since the merger.
Financial Position and Future Outlook
Court filings reveal that Saks Global's assets and liabilities are each estimated to be between $1 billion and $10 billion. The company recently secured $1.75 billion in financing and appointed a new chief executive, providing some stability during the restructuring process.
Saunders added further context regarding the bankruptcy proceedings: Bankruptcy will give Saks Global some breathing space and a chance to restructure. However, it is vital that debt levels are brought down and that the company has room to make the investments needed to make up for more than a year of neglect. Relations with suppliers will also have to be reset. All of this will be a tall order that will take some years to correct.
The restructuring marks a pivotal moment for one of America's most storied luxury retail institutions as it attempts to navigate profound changes in consumer behaviour and market dynamics while addressing significant financial challenges.
