Luxury Department Store Giants Saks and Neiman Marcus CombineLuxury Department Store Giants Saks and Neiman Marcus Combine The parent company of Saks Fifth Avenue, Hudson’s Bay Company (HBC), has reached an agreement to acquire its luxury rival, Neiman Marcus Group, for $2.65 billion. The resulting entity, Saks Global, will include the Saks Fifth Avenue, Saks OFF 5TH, Neiman Marcus, and Bergdorf Goodman brands, along with the real estate assets of both companies. Consolidating a Struggling Industry The deal comes amidst challenges faced by both Saks and Neiman Marcus as consumers shift their spending habits and luxury brands expand their own retail presence. By combining forces, the companies aim to reduce operating costs and strengthen their negotiating power with suppliers. Expansion in E-commerce and Other Initiatives Saks Fifth Avenue has recently spun off its website into a separate company, while Neiman Marcus emerged from bankruptcy in 2020 after temporarily closing stores during the pandemic. The combined Saks Global will continue to invest in e-commerce and explore other initiatives to stay competitive in the evolving retail landscape. Industry Impacts The merger between Saks and Neiman Marcus is expected to impact the broader department store industry. Other major players like Lord & Taylor and Macy’s have faced closures and downsizing in recent years. While Saks and Neiman Marcus are positioned as luxury retailers, it remains to be seen whether the combined entity can counter the growing power of global luxury conglomerates. Analyst Perspectives Some analysts believe that the merger may not be sufficient to address the fundamental challenges facing luxury retailers, particularly as consumers seek online convenience and direct access to luxury brands. They also emphasize the need for Saks Global to navigate the complex competitive landscape and adapt to evolving consumer preferences.
NEW YORK (AP) — The parent company of Saks Fifth Avenue has reached an agreement to buy luxury rival Neiman Marcus for $2.65 billion.
NEW YORK (AP) — The parent company of Saks Fifth Avenue has reached an agreement to buy luxury rival Neiman Marcus for $2.65 billion.
The new entity will be called Saks Global and will consist of the Saks Fifth Avenue and Saks OFF 5TH brands, Neiman Marcus and Bergdorf Goodman, as well as the real estate assets of Neiman Marcus Group and HBC, a holding company that acquired Saks in 2013.
The pact was announced Thursday after months of rumors that the department store chains were negotiating a deal.
The Wall Street Journal was first to report on the pending deal on Wednesday.
Both Saks and Neiman Marcus have struggled as shoppers have retreated from luxury goods and shifted their spending toward experiences like travel and fine dining. The two iconic luxury purveyors have also faced stiffer competition from luxury brands that are increasingly opening their own stores. The deal would help reduce operating costs and create more bargaining power with suppliers.
Saks Fifth Avenue currently has 39 stores in the U.S., including its flagship in Manhattan. In early 2021, Saks spun off its website into a separate company, hoping to expand that business at a time when more people are shopping online.
Neiman Marcus filed for bankruptcy protection in May 2020 during the early months of the coronavirus pandemic, but emerged from it in September of that year. Like many of its peers, the privately held department store chain was forced to temporarily close its stores for several months.
Meanwhile, other department stores are under pressure to keep growing their sales.
Storied Lord & Taylor announced in late August 2020 that it would close all of its stores after filing for bankruptcy earlier that month. The company operates online. Macy’s announced in February of this year that it would close 150 unproductive namesake stores over the next three years, including 50 by the end of the year.
Consumers are proving resilient and willing to shop even after a period of inflation. However, buying behavior has changed, with some Americans opting for cheaper products.
According to Saunders, a deal between the two luxury retailers is not the solution to all problems, especially if high-end consumers want to buy luxury goods online or in the stores of luxury brands.
“As a larger entity, the negotiating power with the brands will be somewhat greater, but even a combined chain would not be able to counter the heft and power of the global luxury conglomerates, which still hold most of the cards,” Saunders said. “Therefore, there is a risk that the deal will ultimately create an even bigger headache for Saks.”
Anne D’innocenzio, The Associated Press
