Can Saks Win Back Brands?

Buyers at Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman will be out and about this fashion month. The company confirmed to Vogue Business that Saks Global will have representation during fashion month to attend shows and place buys. It will be a season of earning back trust that was lost over the past year, as Saks’s retailers careened toward bankruptcy. The company filed for Chapter 11 on January 14.

Saks Global’s restructuring is taking place under new CEO Geoffroy van Raemdonck, who will work alongside newly appointed chief restructuring officer Mark Weinsten (who worked with van Raemdonck during Neiman Marcus’s 2020 bankruptcy, prior to the Saks merger). As well as righting Saks’s financial wrongs, van Raemdonck is tasked with repairing the retailer’s now-fraught relationships with the brands it stocks. Lana Todorovich, the former chief merchandising officer at Neiman Marcus, was named chief of global brand partnerships and will play a key role in mending those relationships.

Much is still up in the air, experts flag: whether Saks Global will restructure entirely; sell off brands like Bergdorf Goodman; close a significant amount of stores; or liquidate assets. This should become clearer soon, says Sarah Foss, global head of legal at financial consultancy Debtwire. The debtors are required to file their Chapter 11 plan of reorganization within 75 days of the bankruptcy filing. If the plan is approved by the court and the milestones aren’t extended, Saks will exit bankruptcy within 160 days of the filing, which would be early June.

On January 16, Saks announced that the judge overseeing the bankruptcy had granted interim access to financing, which would provide nearly $1.75 billion in new money. This is a step toward showing vendors that there is money in the bank to pay them, Foss says. And on January 29, some of the restructuring plan came to light: Saks announced that it will close the majority of its off-price Saks Off 5th locations and that those that remain open will serve primarily as a selling channel for residual inventory from Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman. Saksoff5th.com (a separate entity from Saks Global) will wind-down its operations. The emphasis, the announcement said, will be on full-price luxury sales, and “sustainable, profitable growth for its luxury retail brands and partners”.

That’s meant to send a vote of confidence to the brands who’ve been burned in the bankruptcy process. At the beginning of this week, on January 26, Gary Wassner, CEO of factor Hilldun Corporation, started approving orders — which had been on pause since December — after reaching an agreement with Saks on process and terms. It’s a net 30 terms agreement, meaning Saks has 30 days to pay Hilldun (which owns the invoices) the full amount from the day it receives the invoice.

Brands were “thrilled” to begin shipments, Wassner says, and doesn’t anticipate hesitation moving forward. “If we approve, they will ship,” he says. “We keep our clients as informed as possible of the progress and circumstances occurring with the Chapter 11. Should we have concerns in the future for any reason, we will inform them immediately. Our most important requirement is that we receive payments for our clients’ deliveries according to the agreements we have made with Saks.”