Saks Global completes $2.7 billion Neiman Marcus acquisition

By Pune Media On Dec 31, 2024 20

Saks Global has officially completed its $2.7 billion acquisition of Neiman Marcus Group, combining two major players in luxury retail under one corporate umbrella.

First revealed in July, the deal brings together Saks Fifth Avenue, Saks Off 5th, Neiman Marcus, and Bergdorf Goodman under the newly formed Saks Global. Despite the merger, each retailer will continue to operate independently under its existing brand name, according to the announcement.

Equity contributions from Amazon and Salesforce partially funded the transaction. As an investor, Amazon will focus on driving innovation for customers and brand partners, Saks Global said in the release. As well, Salesforce will use AI and first-party data to create a “highly customized shopping experience,” it said.

“By uniting Neiman Marcus, Bergdorf Goodman, and Saks Fifth Avenue, we have created an unparalleled multi-brand luxury portfolio with tremendous growth potential,” Richard Baker, executive chairman of Saks Global, said in a statement. “With data and innovation at our core and a portfolio of prime real estate, we aim to redefine the luxury shopping experience.”

Neiman Marcus acquisition cements Saks Global as a luxury retail powerhouse

The acquisition follows a definitive agreement signed in July between Hudson’s Bay Co. (HBC), the parent company of Saks Fifth Avenue, and Neiman Marcus Group, parent of Neiman Marcus and Bergdorf Goodman. Saks Global is the U.S. division of Toronto-based HBC.

Under the deal, Saks Global said it also gains control of both HBC’s U.S. real estate assets and Neiman Marcus Group’s real estate assets, creating a combined $7 billion portfolio.

Meanwhile, HBC’s Canadian business will now operate as a standalone entity, separate from Saks Global. The division ensures that HBC’s Canadian business and real estate assets and Saks Global are separately financed, the company said.

Hudson’s Bay, which includes its brick-and-mortar stores and TheBay.com, has been recapitalized and will continue executing its business plan. According to the announcement, the company will continue to own or lease a CAD$2 billion real estate portfolio, either entirely or with its joint venture partner, RioCan Real Estate Investment Trust.

Hudson’s Bay Co. (HBC) is No. 27 in the Top 1000. The database is Digital Commerce 360’s ranking of North America’s largest online retailers. Nieman Marcus is No. 62 in the database.

Amazon and Salesforce drive innovation and personalization

The deal’s financing includes equity contributions from a group of prominent new investors. Among them are Amazon, Salesforce, Authentic Brands Group, M. Klein & Company, and G-III Apparel Group.

Amazon, which ranks No. 1 in the Top 1000, “will work with Saks Global to innovate on behalf of customers and brand partners,” Saks said. The ecommerce giant also holds the No. 3 spot in Digital Commerce 360’s Global Online Marketplaces Database, which ranks the 100 largest such marketplaces by third-party gross merchandise value.

Salesforce will also play a crucial role in advancing Saks Global’s technology strategy, using first-party data and AI to deliver a more personalized shopping experience, according to the announcement.

“As one company, we have an opportunity to transform the way we serve consumers, blending art and science to ensure each customer’s experience is unmistakably their own,” said Marc Metrick, CEO of Saks Global Operating Group, in a statement. “With deep relationships across the industry, cutting-edge personalization and strategic technology partnerships, we are poised to drive innovation and growth.”

Additionally, G-III Apparel Group, the owner of brands like DKNY and Karl Lagerfeld, will continue as a key merchandising partner for Saks Global, the company said.

Meanwhile, Authentic Brands Group, which owns more than 50 brands including Brooks Brothers and Eddie Bauer, will extend its collaboration with Saks Global through the previously announced Authentic Luxury Group (ALG) joint venture.

According to the companies, ALG combines the strengths of Authentic and Saks Global to expand the reach of Authentic Brands’ luxury brands across sectors such as fashion, retail, digital platforms, hospitality, real estate, art, and travel.

Debt financing and ownership structure support the deal

Saks Global said it also financed the acquisition through $2.2 billion in senior secured notes and an asset-based revolving credit facility,

According to Bloomberg, HBC launched a $2 billion-plus, five-year junk bond offering in December to help fund the acquisition.

Existing investors, including Rhône, Insight Partners, Abu Dhabi Investment Council, and Abrams Capital, will maintain their ownership stakes in the restructured entity.

Saks Global leadership structure refined for growth

As part of the acquisition, Metrick, the former Saks CEO, is now CEO of Saks Global Operating Group. Ian Putnam, former president and CEO of HBC Properties and Investments, becomes CEO of Saks Global Properties & Investments. Both will report directly to Baker.

Bergdorf Goodman will remain a standalone business in the deal. Tracy Margolies, previously Saks’ chief merchandising officer, will step into the role of Bergdorf Goodman’s president.

“Tracy’s deep expertise and track record of leading results-driven strategies will propel Bergdorf Goodman into the future while honoring its unique legacy,” Metrick said in a statement.

Additionally, Saks Global has created the role of president and chief commercial officer. Emily Essner, formerly Saks’ chief marketing officer, will take on this new position, overseeing “the company’s go-to-market strategy by aligning key commercial functions to enhance the customer experience and drive revenue,” according to Saks.

To further support its transformation strategy, Saks Global has also appointed Bill Bine as its chief transformation officer, a newly created role.

Bine joins Saks Global from Neiman Marcus Group, where he previously served as chief supply chain officer.

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