Saks Off 5th's Online Operation Shuts Down Following Parent Company Bankruptcy
The discount arm of luxury department store Saks Fifth Avenue, Saks Off 5th, is closing its entire online operation as part of parent company Saks Global's bankruptcy proceedings. The website has launched a massive clearance sale with discounts reaching up to 90 percent as it prepares to shut down permanently once all remaining stock is sold.
Bankruptcy Filing Triggers Online Liquidation
This dramatic move comes after Saks Global, which also owns Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman, filed for Chapter 11 bankruptcy protection on January 14. A court has approved the shutdown and sale of Saks Off 5th's online-only business as part of the bankruptcy process.
Importantly for shoppers, this does not mean everything Saks is disappearing - at least for now. The physical Saks Off 5th stores are part of the wider bankruptcy but are not included in this specific online liquidation. Likewise, the main Saks Fifth Avenue stores and its primary website remain unaffected at this stage.
Separate Online Business Failed to Deliver
The business was split in two back in 2021, separating its brick-and-mortar stores from its online operation. This strategic move was intended to attract tech talent, capitalise on the pandemic-driven e-commerce boom, and lure outside investors. Saks Off 5th poured significant resources into technology and marketing, but ultimately failed to generate sufficient revenue to justify the substantial costs involved.
While Saks Global still owns 80 percent of the Saks Off 5th online business, outside investors own the remaining portion and together have invested approximately $200 million. The parent company's substantial debt burden has also negatively impacted the Saks Off 5th division.
Luxury Retail Powerhouse Struggles
This month's bankruptcy filing arrives just over a year after a high-profile deal brought Saks Fifth Avenue, Bergdorf Goodman, and Neiman Marcus together in an ambitious attempt to create a luxury retail powerhouse. Retail expert Neil Saunders of GlobalData told the Daily Mail: '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.'
The filing has raised serious questions about the future of these storied American fashion brands, although Saks announced early Wednesday that its stores would remain open after securing $1.75 billion in financing and appointing a new chief executive.
Store Closures Expected
Retailers frequently use Chapter 11 bankruptcy to exit expensive leases, and Saks is anticipated to close around half of its Off Fifth locations, along with several of its 41 main Saks stores and some of its 36 Neiman Marcus locations. In a typical Chapter 11 process, store closures usually commence approximately 30 days after the filing.
Saks revealed in November that it would shutter nine of its roughly 100 Saks Off Fifth stores in January, but concerns are mounting that the final number of closures could be substantially higher. The discount chain, which competes with other luxury outlets like Nordstrom Rack and TJX Companies, had already announced plans to close nine stores by early 2026 as part of cost-cutting measures.
Historical Context and Current Challenges
The original Saks Fifth Avenue store, founded in 1867 by retail pioneer Andrew Saks, has long been a cornerstone of American luxury retail. Known for exclusive brands including Chanel, Cucinelli, and Burberry, as well as its celebrated holiday light displays, its flagship on Fifth Avenue in New York became a tourist attraction in its own right.
However, in recent years, Saks has struggled to adapt to a luxury market transformed by internet shopping and brand-owned stores. Long favoured by wealthy and high-profile shoppers, the company never fully recovered from the COVID-19 pandemic as online competition intensified and luxury brands increasingly shifted sales to their own direct channels.
Last year, the company encountered difficulties paying suppliers, prompting some vendors to withhold inventory. Court filings indicate Saks Global's assets and liabilities are each estimated at between $1 billion and $10 billion.
Leadership Changes and Future Prospects
Former Neiman Marcus chief executive Geoffroy van Raemdonck will succeed Richard Baker, the architect of the acquisition strategy that left Saks Global heavily indebted. Baker, the company's executive chairman, had only assumed the CEO role at the beginning of the year.
Saunders added: '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.'
This crisis represents a dramatic reversal for a retailer that only last year pitched a bold comeback plan built around its $2.7 billion takeover of rival Neiman Marcus. The deal has not yielded the anticipated benefits for either retailer, with Saks closing a store in San Francisco and Neiman Marcus shuttering a flagship in Dallas since the merger.
