In a significant move within the luxury retail sector, the parent company of Saks Fifth Avenue, HBC, has announced its acquisition of upscale rival Neiman Marcus Group for $2.65 billion. The deal, which has been in negotiations for about a year, will create a new entity called Saks Global, positioning it as a luxury powerhouse in an increasingly fragmented market.
Under the agreement, Saks Global will encompass the Saks Fifth Avenue and Saks OFF 5TH brands, as well as Neiman Marcus and Bergdorf Goodman. The real estate assets of Neiman Marcus Group and HBC will also be included. Notably, online giant Amazon will hold a minority stake in the new organization, adding a unique dimension to the anticipated pact.
The acquisition aims to address the challenges faced by both Saks and Neiman Marcus, as high-end shoppers have shifted their spending towards experiences and luxury brands have opened their own stores. By combining forces, the new entity expects to reduce operating costs, gain more negotiating power with vendors, and offer shoppers better access to a wider range of designers, including up-and-coming ones.
Marc Metrick, CEO of Saks’ e-commerce business, will assume the role of CEO of Saks Global. He emphasized the growing demand for easier access to designer products and personalized shopping experiences. Metrick believes that this strategic move will position Saks, Neiman Marcus, and Bergdorf Goodman to meet these evolving consumer expectations.
The deal has secured $1.15 billion in financing from investment funds managed by Apollo and a $2 billion revolving asset-based loan facility from Bank of America, with support from Citigroup, Morgan Stanley, RBC Capital Markets, and Wells Fargo.
While the acquisition does not resolve all the challenges faced by luxury retailers, industry experts see potential benefits in Amazon’s involvement. With its expertise in logistics and personalization technology, Amazon could help streamline operations and enhance the online shopping experience for Saks Global’s customers, particularly younger ones.
Saks Global will also include HBC’s U.S. real estate assets and Neiman Marcus Group’s real estate assets, resulting in a $7 billion portfolio of retail real estate assets in top-tier luxury shopping destinations. Ian Putnam, currently president and CEO of HBC Properties and Investments, will lead Saks Global Properties and Investments.
The transaction marks an exciting time in luxury retail, with technological advancements offering new opportunities to redefine the customer experience. The acquisition is expected to unlock significant value for customers, brand partners, and employees, according to Richard Baker, HBC executive chairman and CEO.