Saks Fifth Avenue parent Hudson’s Bay Company. is buying Neiman Marcus for $2.65 billion, the companies announced Thursday, a move that would bring together two national, affluent retailers.
The combined unit, to be called Saks Global, will have a combined 75 stores, including two Bergdorf Goodman locations, along with 100 off-price stores, according to the New York Times, which reported the deal on Thursday.
“Part of what excited us about acquiring Neiman Marcus was acquiring their world-class sales force,” Richard Baker, HBC’s chief executive and chairman, told 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 taking a minority stake in Saks Global. The acquisition is being financed with $2 billion raised by HBC, and affiliates of Apollo Global Management are providing $1.5 billion in debt.
The pairing of the luxury department store chains is not unexpected, GlobalData retail analyst Neil Saunders said in a report Wednesday, noting that executives at Saks and Neiman have been exploring joining forces “for some time.” But Amazon’s involvement “adds some spice” to the mix because it would give the online retailer a foothold in the luxury space.
“The real win here would be Amazon’s ability to improve logistics and e-commerce, giving the new entity an edge in a market where distance shopping has become more important to shoppers — especially younger ones, who both chains need to do more about it. pull.”
The investment in Neiman Marcus is Amazon’s first in a brick-and-mortar retailer since it bought Whole Foods in 2017, according to Bloomberg News. Amazon declined to comment on the planned merger.
Among the country’s oldest retailers
Herbert Marcus Sr., his sister, Carrie Marcus Neiman, and her husband AL Neiman opened the retailer’s first store in Dallas, Texas, in 1907. The company was sold to Broadway-Hale department store operator in 1969, setting the stage for it to expand beyond Texas. Later, Neiman Marcus came under the ownership of the conglomerate Harcourt General, which also published textbooks and owned movie theaters.
In 1999, Harcourt General spun off Neiman Marcus and Bergdorf Goodman department stores. Private equity firms TPG Capital and Warburg Pincus bought the company in 2005 for $5.1 billion.
Today, the retailer has 36 Neiman Marcus stores in the US, two Bergdorf Goodman stores and five Last Call stores. company declared bankruptcy in May 2020, at the time becoming one of the most high-profile retailers to collapse as the COVID-19 pandemic shuttered retailers across the US; it emerged from court supervision roughly four months later after shedding billions in debt.
Saks, based in New York City, was founded in 1924 and today has 41 stores. Hudson Bay – which also runs the Canadian department store chain Hudson’s Bay is known as HBC and has a history dating back to 1670, bought Saks in 2013 for $2.9 billion, including debt, and also owns the Lord & Taylor department store chain.
Both Saks and Neiman have struggled to drive growth in recent years. Although the enlarged company would have greater clout in negotiating with brands, it would still struggle to compete with global luxury conglomerates such as Kering and LVMH, which could end up “creating an even bigger headache for Sax,” Saunders said.