Saks Fifth Avenue owner buys Neiman Marcus for $2.65 billion

Hudson’s Bay Company, the parent company of Saks Fifth Avenue, is acquiring Neiman Marcus for $2.65 billion, the companies announced Thursday, a move that would combine two national and luxury retailers.

According to the New York Times, which reported on the deal on Thursday, the combined entity, to be called Saks Global, will have a total of 75 stores, including two Bergdorf Goodman locations, in addition to 100 discount stores.

“Part of what made us excited about acquiring Neiman Marcus was acquiring their world-class sales force,” Richard Baker, CEO and chairman of HBC, told the New York Times on Wednesday. “People have forgotten how important people are. In luxury sales, you need beautiful stores and salespeople who trust customers.”

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.

GlobalData retail analyst Neil Saunders said in a report Wednesday that the luxury department store chains’ merger is not unexpected, noting that Saks and Neiman executives have been exploring joining forces for “some time.” But Amazon’s involvement “adds some spice” to the combination, as it would give the online retailer a foothold in the luxury sector.

“The real win here would be that Amazon could streamline its logistics and e-commerce, giving the new entity an advantage in a market where remote shopping has become increasingly important for shoppers, especially younger consumers. Both chains need to do more to attract this group.”

The investment in Neiman Marcus is Amazon’s first in a brick-and-mortar retailer since it acquired Whole Foods in 2017, Bloomberg News reported. Amazon 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 retailer’s first store in Dallas, Texas, in 1907. The company was sold to Department store operator Broadway-Hale in 1969which paved the way for expansion outside Texas. Neiman Marcus was later owned by the Harcourt General conglomerate, which also published textbooks and owned movie theaters.

In 1999, Harcourt General spun off Neiman Marcus Stores and Bergdorf Goodman. 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 U.S., two Bergdorf Goodman stores and five Last Call outlets. The company declared bankrupt in May 2020, when it became one of the highest-profile retailers to file for bankruptcy as the COVID-19 pandemic shuttered stores across the U.S.; it emerged from court supervision about four months later after paying down billions of dollars in debt.

Saks, based in New York City, was founded in 1924 and now has 41 stores. Hudson Bay — which also operates 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 department store chain Lord & Taylor.

Both Saks and Neiman have struggled to boost growth in recent years. While the enlarged company would have more leverage in negotiations with brands, it would likely still struggle to compete with global luxury conglomerates like Kering and LVMH, which could ultimately “create an even bigger headache for Saks,” Saunders said.

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