Saks Fifth Avenue’s Parent Company Acquires Neiman Marcus for $2.65 Billion with Amazon’s Support

The parent company of Saks Fifth Avenue has finalized a $2.65 billion deal to acquire its rival Neiman Marcus, with strategic support from Amazon. The Wall Street Journal reported on Wednesday, citing insider sources, that the acquisition will see Amazon taking a minority stake in the newly formed entity.

The merger, which unites two iconic but financially struggling luxury retailers, comes as consumer spending on discretionary items has diminished in the face of inflation and high interest rates. The newly established company, to be named Saks Global, will also have Salesforce as a minority shareholder, contributing artificial intelligence expertise, while Amazon will enhance technological and logistical capabilities.

Already existing partnerships between Saks, Amazon, and Salesforce will be deepened through this transaction, according to the report. Both HBC, the parent company of Saks, and Neiman Marcus have received board approvals for the deal, with an official announcement expected later today. Marc Metrick, the current CEO of Saks’s e-commerce division, will helm the combined company.

While Amazon refrained from commenting, other involved parties, including HBC, Saks Fifth Avenue, Salesforce, and Neiman Marcus, have not yet responded to inquiries from The Wall Street Journal.

Related: Saks Fifth Avenue Faces Antitrust Battle in New York Court

The luxury market experienced a surge in demand as pandemic restrictions lifted in 2022, benefiting brands like LVMH, Ralph Lauren, and Tapestry. However, consumer enthusiasm has since waned, leading to more cautious spending on luxury items. Neiman Marcus notably filed for bankruptcy in 2020, one of the significant retail casualties during the COVID-19 pandemic.

Despite these challenges, the Wall Street Journal reported that there are no immediate plans to shutter stores post-acquisition. The combined company will operate 39 Saks Fifth Avenue stores, 95 Saks Off 5th discount stores, and 36 Neiman Marcus department stores, along with two Bergdorf Goodman stores and five Last Call discount outlets. Additionally, there are eight malls featuring both a Saks Fifth Avenue and a Neiman Marcus store.

Funding for the acquisition includes $2 billion raised by HBC from its current investors. The deal marks a significant reshaping of the luxury retail landscape, aiming to bolster the competitive stance of Saks and Neiman Marcus through enhanced technological integration and operational synergies provided by their new stakeholders.

Source: The Wall Street Journal