Saks Considers Chapter 11 Bankruptcy as $100M Debt Payment Comes Due

Saks Global is considering bankruptcy while facing a $100 million-plus debt payment, Bloomberg reported Monday (Dec. 22).

The luxury retail group is also mulling other ways to boost liquidity, such as raising emergency funding or selling off assets, according to the report, which cited unnamed sources.

At the same time, some Saks lenders have been holding discussions to determine the company’s needs, focusing on a potential debtor-in-possession loan, a type of bankruptcy funding, the report said.

Saks raised billions of dollars last year to fund its turnaround effort, which included the purchase of NMG, the parent company of Neiman Marcus and Bergdorf Goodman. The goal was to create a “technology-powered luxury retail company” that counted Amazon among its investors.

However, the deal placed the struggling retailer deeper in debt as it faced ongoing complaints from suppliers about missed payments, according to the report.

Saks told analysts in June that it had mostly settled things with vendors who were upset about overdue invoices, leading many to cease shipments. However, a report in August said some vendors were still waiting on payments from the retailer.

Earlier this year, Saks convinced creditors to lend hundreds of millions of dollars more in a debt deal that reconfigured its payment priorities, leading to multiple bondholder tiers, the report said. But those securities have since plunged, highlighting investor concern that Saks is running out of time on its turnaround plan.

“Together with our key financial stakeholders, we are exploring all potential paths to secure a strong and stable future for Saks Global and advance our transformation while delivering exceptional products, elevated experiences and personalized service to our customers,” a Saks representative told Bloomberg via email, per the report.

In a column about the Saks/Neiman Marcus merger last year, PYMNTS CEO Karen Webster said it was taking place amid a tough time for department stores, with sales 50% below their peak in 2000, and 30% down from where they were in the 1980s.

“It’s hard to understand what people mean when they say, ‘Department stores are back,’” Webster wrote. “Back from what, exactly? Coming back from zero sales during COVID to levels which don’t even match sales made four decades ago is hardly a comeback story worth writing.”