What Happened To Saks

Saks in Palm Beach

Threadbare Luxury: The Unraveling of Saks Fifth Avenue.

Once the Grande Dame of American department stores, Saks Fifth Avenue used to be the kind of place where the scent of exclusivity wafted from every polished display case. Want a $12,000 Oscar de la Renta gown for your third cousin’s wedding? Saks had you. Needed a pair of velvet loafers embroidered with gold seahorses? Those are on 6. But somewhere between the perfume ‘spritzers and the personal shoppers, Saks Fifth Avenue lost the plot—and a whole lot of money.

Let’s be blunt: Saks is practically broke. Not “belt-tightening” broke. Not “just a little restructuring” broke. We’re talking full-blown, luxury-on-life-support, beg-your-bondholders broke. And the road to this financial faceplant is paved with mismanagement, delusions of grandeur, and the kind of ‘fake it until you make it’ that either takes forever or ends after the weekend.

The Merger No One Asked For

It all started with a truly terrible idea: merging with Neiman Marcus. Why take one flailing department store and strap it to another? It’s like duct-taping two sinking yachts together and calling it a cruise ship? CEO Mark Metrick sold the idea as retail synergy, and private equity loves the smell of synergy, even if it smells suspiciously like desperation and unpaid invoices, because remember, private equity ALWAYS gets paid first. Sorry hard-working vendors.

In December 2024, Saks Global (parent company of Saks, Neiman Marcus, and Bergdorf Goodman) shelled out a hefty $2.7 billion for Neiman Marcus. To finance this retail bromance, they took out $2.2 billion in loans with interest rates that could make a payday lender blush—11 percent. By mid-2025, those bonds were trading at 35 cents on the dollar, down from 97 cents in 2024, which is Wall Street’s version of swiping left. As of the date of this writing (June 2025) Saks was furiously searching for and begging for even more debt…to pay the previous debt. That’s right, and remember in trading terms, last Bondholder in gets paid first. The other guys, well lets hope its warm enough to sell bathing suits this summer!

While investors have not been impressed, vendors were horrified with some smaller ones on the brink of collapse. And Saks? Saks has been busy installing more LED mirrors in their private shopping suites, while closing flagship locations like Palm Beach and Union Square in San Francisco. (well, Newsome’s lack of governing surely didn’t help)

Vendors: The Forgotten Backbone of Retail

Remember those vendors who supply the $5,000 handbags and $900 sweaters? They sort of matter. But Saks apparently thought vendors were like interns—grateful to be included and happy to work for free and wait for payment. Make noise about it and your 120-day-old invoice goes to the bottom of the pile. On February 14, 2025, Saks sent a delightful Valentine’s Day love note to its suppliers: ‘You’ll get paid…’ eventually. Maybe. Sort of. Over the course of perhaps 12 months…and oh yah, starting five months from this letter…in July. With interest? Don’t be cute, thankyouverymuch. That email, complete with a sympathetic “We know this is difficult” tone, caused chaos. Some vendors sued, others simply stopped shipping inventory, placing Saks in an even more precarious position. Because believe it or not, you can’t sell what you don’t have—even in the fantasyland of luxury retail. Saks kept buying, added new (possibly more desperate vendors) and of course, the payments of invoices have trickled in.

Now You See It, Now You Don’t

In a move no one found surprising (except maybe Saks themselves), they began closing stores faster than a panic-stricken Sample Sale. The problem was not just any stores. The Union Square location in San Francisco? Gone. Once an anchor of the entire district now a casualty of poor foot traffic, rising crime, and the general vibe of retail apocalypse. The store had already gone to an “appointment-only” model—because when things get dire, make it sound exclusive. It didn’t work.

Almost poetic in its irony—like the ghost of luxury retail past, Saks decided to set up a punchline on Worth Avenue when it shuttered its Palm Beach location directly across the street from a Neiman Marcus that over panicked during covid and had already called it quits, creating a kind of high-end Bermuda Triangle where couture once went to lunch, and now just goes to die. It’s the retail equivalent of two ex-socialites sitting across from each other in silence, wearing last season’s Chanel and pretending everything’s fine, while just a few store fronts down the Avenue, Louis Vuitton is opening a two-story boutique, Loro Piana has expanded, The Real Real is booming, and Versace has settled in. Bad move Saks.

Meanwhile, the Neiman Marcus flagship in Dallas was also shuttered. Neiman Marcus and Dallas is as synonymous as the JFK assassination and Dallas. And if you think Texas high society takes kindly to losing its couture hub, you don’t know Texas. They’re calling The Big D, The Big Departure.

Layoffs followed in droves including a Tennessee warehouse that got the axe, over 500 corporate jobs and shrinking store footprints, i.e.: tall curtains to cut the floorspace in half.  Saks calls it “streamlining.” The rest of us call it “we can’t afford the electric bill.”

Saks Gets Digital, But Not in a Good Way

In true Titanic-fiddling-while-it-sinks fashion, Saks decided the solution to all this was… artificial intelligence. Yes, the same technology currently trying to sell you goth lipstick after you Googled “funeral attire” once. Saks leaned hard into its online business, touting a snazzy new AI shopping experience and vaguely promising “digital transformation” because nothing distracts from billions in debt like buzzwords in a press release. Word is, they’re also teaming up with Amazon. The horror! Because nothing says luxury quite like the same delivery service that brings you cat litter or dental floss overnight.

Menswear: The Last Great Hope?

Here’s a plot twist: Saks has suddenly remembered men exist. At Pitti Uomo in Italy this June, Saks Global announced a grand pivot toward men’s fashion. Apparently, someone in the C-suite had a eureka moment— “What if we sold clothes to dudes?”

Saks’ menswear business is about one-third the size of womenswear. Their plan? Woo the under-40 male shopper who wants “accessible luxury.” Which is kind of like trying to sell Dom Pérignon at Costco. Sure, it might work, but it’s not exactly on-brand. Saks is hoping the return to office crowd will eventually step out of the cargo shorts and sandals and into golf-related stretch pants and non-logo polos. Achieving high margins in menswear (especially sportswear) is not really a strategy, it’s akin to stand up comedy.  Everybody bombs at some point and Saks can’t afford to.

The Debt Elephant in the Room

Let’s circle back to those bonds, shall we? The $2.2 billion elephant in Saks’ gilded dressing room. To keep things from spiraling off the escalator and into Chapter 11, Saks scrambled to secure a $600 million emergency financing deal this June. That included $300 million in new cash and a bond swap that, naturally, upset the old bondholders who weren’t invited to the party. Now, Saks has upped their pledge to save $500 million a year via layoffs, store closures, and a sleeker operation. Which sounds suspiciously like they’re pawning the silverware while trying to host a gala as they usher more guests through the kitchen door.

At this point, even the PR team seems exhausted. They’re still insisting that Saks is “well-positioned for the future,” which is exactly what people say right before asking if you validated your ticket for parking. The reality is that Saks is in a retail death spiral, one fueled by bad bets, bloated mergers, and the kind of corporate hubris usually reserved for failed social media startups. They forgot that luxury retail is about more than labels and lighting—it’s about consistency, trust, vendor loyalty and placement of actual merchandise.

The top brands (many who have space in Saks) Chanel, Gucci, Loro Piana, Louis Vuitton etc. have exploded in popularity and sales by adding stores and more importantly providing loyal customers with “experiences” and events that ultimately lead to big ticket sales. How could Saks whoo shoppers with less merchandise in stores and muslin curtains being used as walls to shrink the store size?

June 2025 saw sales slide 28% while both Nordstrom and Bloomingdales had 10% increases. That tells you that the market (shoppers) are finding the Saks merchandising about as appealing as the bond holders are finding the debt. Remember what Hemmingway wrote about how one actually goes bankrupt: “Two ways. Gradually, then suddenly”. Stay tune.