With the newly formed Saks Global, many designers and brands have much to look forward to this year.
Like finally getting paid and working with a recapitalized, stabler combined company with potentially different buying objectives and terms. And getting acquainted with new managers assigned to new roles to run the Neiman Marcus and Saks Fifth Avenue operations. A management structure that breaks the industry mold was unveiled in late December when Saks said it finalized its deal to buy Neiman’s.
Some store closings, such as Saks on Worth Avenue in Palm Beach, Fla., and consolidations of back office functions are to be expected. Business in Canada, where Saks Global’s parent company HBC operates Saks and Hudson’s Bay stores, is particularly tough.
The agreement by Saks to buy the Neiman Marcus Group creates a luxury retail empire in the U.S. including Neiman Marcus, Bergdorf Goodman, Saks Fifth Avenue and Saks Off 5th. Saks Global executive chairman Richard Baker managed to pull off the $2.7 billion acquisition with the support of Amazon, Salesforce, G-III Apparel Group and Authentic Brands Group and $2.2 billion in junk bonds, despite Saks owing its vendors hundreds of millions of dollars. While there were reportedly some hiccups in lining up the financing for the deal, Baker has proven himself time and again a whiz at orchestrating unorthodox retail and real estate deals.
Saks Global executives have issued assurances that vendors will get paid, but there’s no clear timetable yet. In his memo to his team on Dec. 23, a copy of which was obtained by WWD, Baker wrote: “I’m pleased to share that with the closing of the transaction, Saks Global has greater financial stability with less leverage and a newly funded revolving line of credit, providing significant levels of available liquidity. This financial structure enables us to make investments to better serve our customers and be a better partner to our vendors.”
Baker also wrote, “With the closing of the NMG transaction, HBC’s Canadian business has been recapitalized as a stand-alone entity, separate from Saks Global, with significantly reduced leverage.” He’s blamed challenges in the Canadian business for the shortfall in paying Saks’ vendors.
Richard Baker
Courtesy image
Marc Metrick, chief executive officer of the new Saks Global Group, told WWD that the transaction “recapitalizes the company and puts us in a much better cash position and much better position operating the business.” He also said that starting in January, “we will begin the process to work through the delayed payments. It will begin the first week of January. That’s when the process starts.”
To lead Saks and Neiman’s, a single management structure has been established with new leaders and senior positions and titles the industry hasn’t seen before, and fewer traditional roles, like no chief merchants. Saks and Neiman Marcus will be managed by one team, whereas Bergdorf Goodman will be managed separately, according to Metrick. Tracy Margolies, who was chief merchandising officer for Saks, has been appointed president of Bergdorf Goodman.
Also, Ian Putnam will serve as CEO of Saks Global Properties & Investments. Both Metrick and Putnam will report to Baker.
Emily Essner, forrmerly chief marketing officer at Saks, has been promoted to a new role — president and chief commercial officer — in which she will oversee the merchandising, marketing, commercial analytics and e-commerce operations for Saks and Neiman Marcus.
“The big takeaway first is that we believe there is a ton of talent at Neiman Marcus Group,” Metrick said. “When we get into the integration as we move forward, there will be a lot of cross pollination between the companies.”
Asked about possible store closings, Metrick replied, “This is about transformation, not consolidation. It’s about growth….There are redundant functions that are going to be rationalized. It will be a process we go through over time.”
Marc Metrick
