Saks Fifth Avenue Owner Buys Neiman Marcus for $2.65 Billion

Hudson's Bay Co., the parent company of Saks Fifth Avenue, announced it is acquiring Neiman Marcus for $2.65 billion, a move that would merge two national upscale retailers.

The combined entity, to be called Saks Global, will include 75 stores, including two Bergdorf Goodman locations, along with 100 discount outlets, according to The New York Times, which reported the deal on Thursday.

“Part of what excited us about acquiring Neiman Marcus was the acquisition of their world-class sales force,” said Richard Baker, HBC’s chairman and CEO. Tell The New York Times on Wednesday: “People have forgotten how important people are. When you sell luxury products, you need beautiful stores and salespeople that customers trust.”

Amazon is facilitating the deal by acquiring a minority stake in Saks Global. The acquisition is being financed by $2 billion raised by HPC, with affiliates of Apollo Global Management offering $1.5 billion in debt.

The luxury retailer pairing up isn’t unexpected, Neil Saunders, a retail analyst at GlobalData, said in a report Wednesday, noting that executives at Saks and Neiman have explored the idea of ​​joining “for some time.” But Amazon’s involvement “adds a little spice” to the merger because it would give the online retailer a foothold in luxury goods.

“The real win here will be Amazon’s ability to simplify logistics and e-commerce, giving the new entity an edge in a market where remote shopping is becoming more important to shoppers — especially younger ones, which both chains need to do more to attract.”

The investment in Neiman Marcus is Amazon's first in a retail company since its acquisition of Whole Foods in 2017, according to Bloomberg NewsAmazon declined to comment on the planned merger.

Among the oldest retailers in the country

Herbert Marcus Sr., his sister Carrie Marcus Neiman, and her husband A.L. Neiman opened the first retail store in Dallas, Texas, in 1907. The company was sold to Broadway Hill Store Operator in 1969This paved the way for its expansion outside Texas. Later, Neiman Marcus became owned by Harcourt General, which also published school textbooks and owned movie theaters.

In 1999, Harcourt General founded Neiman Marcus and Bergdorf Goodman. In 2005, private equity firms TPG Capital and Warburg Pincus bought the company for $5.1 billion.

Today, the company owns 36 Neiman Marcus stores in the United States, two Bergdorf Goodman stores and five Last Call outlets. go bust In May 2020, the company became one of the most prominent retailers to collapse as retail stores across the United States closed due to the COVID-19 pandemic; it emerged from court supervision about four months later after shedding billions of dollars in debt.

New York City-based Saks was founded in 1924 and today has 41 stores. The Hudson's Bay Company, which also operates the Canadian department store chain Hudson's Bay, is known as HBC and has a history dating back to 1670, Buyer It bought Saks in 2013 for $2.9 billion, including debt, and also owns department store chain Lord & Taylor.

Both Saks and Neiman have struggled to grow in recent years. While the expanded company will have greater leverage in negotiating with brands, it will likely still struggle to compete with global luxury conglomerates such as Kering and LVMH, which could end up “creating a bigger headache for Saks,” Saunders said.