Saks Acquires Neiman Marcus – New York Times

In a move that could boost the luxury retail market, the parent company of Saks Fifth Avenue has agreed to acquire Neiman Marcus in a $2.65 billion deal, creating the ultimate luxury retail giant, the companies announced Wednesday.

The deal, which has been rumored since Neiman Marcus filed for bankruptcy protection during the pandemic, comes more than four years after Saks bought the Barneys name license after that group went bankrupt. It also follows a wave of luxury e-tailer failures, including those at FarFetch and Matches.com. Saks is owned by HBC, a retail giant. Buy the American chain In 2013 – the year after HBC also acquired Lord & Taylor.

“Customers love going to stores,” Richard Baker, HBC’s CEO and chairman, told The New York Times. “They love touching products and spending time with personal shoppers.”

Mr. Baker said he had been envisioning the deal since he bought Saks. “Part of what excited us about acquiring Neiman Marcus was the global sales force that it had,” he said. “People have forgotten how important people are. When you’re selling luxury, you need beautiful stores and sellers that customers trust.”

The Neiman Marcus acquisition makes Saks Global, as the new group will be called, the dominant player in its market, with a total of 75 stores (including two Bergdorf Goodman locations) and 100 discount outlets. The new group’s only real competitors in the U.S. will be Macy’s, which also includes Bloomingdale’s, and Nordstrom. The group will be run by Mark Metrick, the current CEO of Saks and Saks.com.

The companies said they plan to invest in technology, including artificial intelligence, as well as legacy and emerging brands.

“Saks has remained steadfast in its commitment to being at the forefront of luxury fashion, meeting the needs of customers not just where they are but where they are going,” said Mr. Metrick. “Together, with our continued focus on innovation, we are poised to drive growth for our brand partners and create career development opportunities for the incredible talent at Saks Global.”

The deal is also a vote for the future of traditional retail and a signal of the importance of luxury real estate as luxury companies like LVMH seek out prime retail properties. Mr. Becker, a real estate veteran, will now run a retail company that includes the Saks flagship in Midtown Manhattan and Bergdorf Goodman on Fifth Avenue. The companies said the new portfolio would be valued at $7 billion.

The two companies have long been seen as potential partners, given their overlapping high-end customer bases. But both have struggled financially, complicating their efforts over the years to merge.

What may have helped the deal get done was some help from Amazon, which has a minority stake in Saks Global. HBC, which also owns the Canadian department store chain Hudson’s Bay, is financing the acquisition with $2 billion raised from existing investors, while affiliates of investment firm Apollo Global Management are providing $1.5 billion in debt.

Mr Baker said the company “does not plan to close any stores, digital businesses or reduce services in any way,” even though both operate in many of the same markets.

Analysts said they expect retailers to be able to save other costs through the merger.

“There will definitely be efficiencies,” says Robert Burke, founder of luxury retail consultancy LVMH. “Retail has been slow recently, and there may be more investment in both stores than in the past. The real question is how will brands react to this? Especially LVMH and Kering.”

LVMH is the luxury goods conglomerate that owns Dior, Louis Vuitton and Fendi, among other brands; Kering owns Gucci, Balenciaga and Saint Laurent. Both groups sell their goods at Saks and Neiman Marcus, but are increasingly focusing on attracting consumers to their own stores and e-commerce sites.

On the other hand, smaller independent brands, which have long relied on department stores to reach consumers across the country, will have less choice and power in their negotiations with stores.

The Federal Trade Commission has been paying close attention to the mergers of fashion retailers. In April, Moved to block The case has raised concerns about the planned takeover of Capri (the group that owns Michael Kors, Versace and Jimmy Choo) by Tapestry Corp. (which owns Coach, Kate Spade and Stuart Weitzman). The agency has alleged that the planned merger would affect competition between the different brands. The case is expected to go to trial in September.

When it comes to the Sachs-Neiman deal, Mr. Burke said, “I’m sure they’ll look at it very closely.”