Saks Global isn’t ruling out bankruptcy as it scrambles to shore up its finances.
Following a report by Bloomberg that the department store conglomerate is considering a Chapter 11 filing “as a last resort,” a spokesperson told Retail Dive that the company is mulling various options.
“Together with our key financial stakeholders, we are exploring all potential paths to secure a strong and stable future for Saks Global and advance our transformation while delivering exceptional products, elevated experiences and personalized service to our customers,” the spokesperson said by email. “Importantly, opportunities in the luxury market remain strong, and Saks Global continues to play a distinct and enduring role within it.”
A debt payment of at least $100 million, due Dec. 30, is driving the financial discussions, per Bloomberg’s report. Saks didn't immediately confirm that.
After merging luxury retailers Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman in a $2.7 billion deal to create Saks Global a year ago, the company has struggled and now seems stuck. Several vendors remain unpaid despite a pledge in February to deal with overdue accounts, and several analysts have questioned whether the company could amass the inventory it needs for Q4.
The company reported sales declines and widening losses in Q2, and conceded that sales suffered from lack of inventory.
The trouble has been a boon to rivals Bloomingdale’s and Nordstrom, which have picked up share this year, according to transaction data from Bloomberg Second Measure.
Not all observers see bankruptcy as a problem for the company. Glenn McMahon, managing partner at MAC Advisory and Consulting, has told Retail Dive he sees it as a desirable outcome because it would allow the company to shutter underperforming stores and/or cut back on locations where Neiman Marcus and Saks Fifth Avenue directly compete. About 40% of the two fleets are in close proximity to each other, sometimes anchoring the same malls.
