Saks Global, a U.S. luxury department store with about 150 years of history, has entered bankruptcy protection after failing to overcome a cash crunch. The industry was stunned by news that Saks, which has ranked fourth in the U.S. department store sector by sales after Macy's, Kohl's, and Nordstrom, filed for bankruptcy.
On the 14th (local time), Bloomberg and other outlets said Saks Global Enterprises issued a statement saying it filed for Chapter 11 bankruptcy protection with a Texas court. Saks also said it secured about $1.75 billion (about 2.6 trillion won) in financing to keep its department stores operating normally.
Saks began in 1867 when brothers Andrew Saks and Isadore Saks opened a menswear shop in Washington, D.C. It later opened its flagship on Fifth Avenue in New York, helping turn the area into a shopping hub. Although its ownership changed multiple times, Saks has long been regarded as a representative U.S. luxury department store.
But in the 2020s, Saks' management began to falter rapidly. According to the Wall Street Journal (WSJ), Saks struggled to pay suppliers from 2023 as the pandemic neared its end. After some suppliers cut shipments or halted deliveries altogether, Saks faced major setbacks in expanding sales.
Then the 2024 acquisition of Neiman Marcus delivered the decisive blow. At the time, Saks issued large amounts of corporate bonds to acquire Neiman Marcus for $2.65 billion (about 3.9 trillion won). Early on, there were projections it would become a "luxury behemoth" overseeing 75 department stores and 100 outlet locations, but it ultimately could not shoulder more than $100 million in bond interest and entered bankruptcy proceedings.
The Associated Press said, "When Saks said it would acquire Neiman Marcus, the goal was to create a powerful behemoth corporations in a luxury market that was becoming increasingly fragmented," but added, "the deal only swelled Saks' already heavy liability as luxury spending slowed."
Saks Global owns 33 Saks Fifth Avenue stores and about 36 Neiman Marcus stores. It also operates about 80 locations including Bergdorf Goodman and Saks Off Fifth. As part of the bankruptcy process, Saks said it is "reviewing all aspects of operations to focus resources on areas with the greatest long-term growth potential."
The Wall Street Journal (WSJ) said, "Saks has become the most famous department store chain to file for Chapter 11 after the pandemic," adding, "Saks' downfall has dealt a major shock to the fashion industry broadly, and suppliers are anxious about whether they can recoup losses."
The overall situation for department stores lately is also tough. According to a report released in November last year by global consulting corporations Bain & Company, with consumers cutting expenditure amid economic jitters, global luxury sales are expected to decline for a second straight year. In response, U.S. department store giant Macy's decided early this year to close 14 more stores to restore profitability, while Hudson's Bay, the oldest corporations in Canada, already entered bankruptcy protection last year.
Suppliers are also expected to take an unavoidable hit from Saks' bankruptcy. Gary Wassner, CEO of Hildun Corporation, which provides credit guarantees to fashion suppliers, said, "Vendors are extremely nervous about shipping already completed spring season goods," adding, "they are stuck with inventory because they have not even completed deliveries for quantities produced in the fourth quarter of last year." Saks is said to account for about 40%–50% of some suppliers' sales.