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Luxury retailer Saks Global announced significant store closures Tuesday as part of its ongoing Chapter 11 bankruptcy restructuring, shuttering eight Saks Fifth Avenue locations and its Neiman Marcus Boston store as the company focuses on its most profitable operations.
The Saks Fifth Avenue locations slated for closure include stores in Philadelphia, Columbus, Ohio, and Phoenix, reducing the company’s portfolio to 25 Saks Fifth Avenue stores and 35 Neiman Marcus locations. Saks Global will continue to operate its two Bergdorf Goodman stores in New York City.
Customers will still have time to shop at the affected locations, which will remain open until the end of April, according to company officials.
The restructuring extends beyond just department stores. Saks Global announced it will wind down 14 standalone Fifth Avenue Club personal styling suites by Saturday, though three locations will remain operational. Additionally, the company will shut down Horchow.com, a home goods e-commerce site that Neiman Marcus acquired in the late 1980s. Beginning February 19, shoppers visiting Horchow.com will be redirected to the home category on NeimanMarcus.com, where the company says the full assortment previously available on Horchow will continue to be offered.
Company representatives described these closures as the initial phase of a broader restructuring plan affecting both Neiman Marcus and Saks Fifth Avenue locations. According to Saks Global, the stores targeted for closure represent a small portion of its business and were unprofitable.
“We are initiating a series of actions to reinforce Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman as the ultimate destinations for luxury with a seamless multichannel shopping experience,” said Geoffroy van Raemdonck, CEO of Saks Global, in a statement.
This announcement follows the company’s decision last month to dramatically scale back its off-price retail operations. Saks Global revealed plans to close most of its Saks Off 5th locations, reducing the chain from 70 stores to just 12. The remaining outlets will primarily serve as liquidation channels for excess inventory from the company’s luxury banners: Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman.
In a similar move, the company is also closing its remaining five Last Call stores, which had functioned as discount outlets for Neiman Marcus merchandise.
The aggressive cost-cutting measures come as Saks Global navigates the complex financial landscape following its Chapter 11 bankruptcy filing on January 14. The luxury retailer has faced mounting challenges from increased competition in the high-end retail sector and the substantial debt burden it assumed when acquiring rival Neiman Marcus just over a year ago.
To stabilize operations during the restructuring process, Saks Global has secured approximately $500 million in financing as part of a broader $1.75 billion financial package. This capital infusion is critical for addressing unpaid supplier invoices, as maintaining relationships with vendors is essential to keeping stores properly stocked with the luxury merchandise that defines the company’s brands.
The luxury retail sector has faced significant headwinds in recent years, with changing consumer shopping habits, increased competition from online retailers, and economic uncertainties affecting even high-end shoppers. Saks Global’s restructuring represents one of the most significant overhauls in luxury retail as the company attempts to realign its operations for long-term viability in an increasingly challenging market.
Industry analysts will be watching closely to see if this restructuring can successfully position Saks Global’s premium retail brands for a sustainable future in the evolving luxury landscape.
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8 Comments
This restructuring highlights the ongoing challenges facing luxury retail. Saks Global’s focus on their core Saks Fifth Avenue and Neiman Marcus brands is likely a prudent strategy, but the store closures will still be tough for the communities affected.
While it’s always tough to see stores close, Saks Global’s bankruptcy restructuring seems necessary to streamline the business and focus on their most profitable operations. Curious to see how this plays out for the company going forward.
The shift towards e-commerce and changing consumer preferences have been challenging for traditional department stores. Saks’ move to integrate Horchow.com into Neiman Marcus could help improve their online offerings.
The restructuring at Saks Global is a difficult but necessary step in this challenging retail environment. Focusing on their most profitable operations makes sense as they navigate the Chapter 11 bankruptcy process.
Consolidating their store footprint and winding down less profitable brands like Horchow.com is likely a prudent move to streamline the business.
The pandemic has certainly accelerated the need for major restructuring in the retail sector. Saks Global’s moves to optimize their store footprint and digital presence seem like a reasonable approach to weather the storm.
It’s interesting to see how luxury retailers like Saks are adapting to the changing consumer landscape. Closing underperforming stores while maintaining their core Saks Fifth Avenue and Neiman Marcus brands could position them for a stronger recovery.
The decision to shut down the Fifth Avenue Club personal styling suites is a bit surprising. I wonder if they are seeing less demand for those high-touch services.