Saks Completes $2.7 Billion Deal to Purchase Neiman Marcus Group

A brand new luxurious retail empire has been created.

Late Monday afternoon, Saks International disclosed that it has finalized its acquisition of Neiman Marcus Group for a complete enterprise worth of $2.7 billion, as has been anticipated. The settlement by Saks to purchase the Neiman Marcus Group was revealed in July 2024.

Saks International now consists of Neiman Marcus, Bergdorf Goodman, Saks Fifth Avenue and Saks Off fifth, and represents a complete quantity of roughly $10 billion.

Richard Baker, government chairman of Saks International, mentioned in a press release, “This milestone transaction marks a transformative second for Saks International and the luxurious retail business. By uniting Neiman Marcus, Bergdorf Goodman and Saks Fifth Avenue, we have now created an unparalleled multibrand luxurious portfolio with great development potential. With knowledge and innovation at our core and a portfolio of prime actual property, we intention to redefine the luxurious buying expertise.”

Together with the announcement of the closing, Saks disclosed a number of elementary modifications in how Saks International will function and combine the Neiman Marcus Group, in addition to a flurry of government modifications on the high rungs of the enterprise and government departures.

Saks and Neiman Marcus shall be managed by one group, whereas Bergdorf Goodman shall be managed individually, in response to Marc Metrick, who takes on the function of chief government officer of the Saks International Working Group.

Additionally, Ian Putnam will function CEO of Saks International Properties & Investments. Each Metrick and Putnam will report back to Baker.

Emily Essner, forrmerly chief advertising officer at Saks, has been promoted to a brand new function – president and chief business officer, wherein she is going to oversee the merchandising, advertising, business analytics and e-commerce for Saks and Neiman Marcus. “She’s received all issues shopper associated,” Metrick instructed WWD in an interview Monday night. “Her group shall be supporting the Saks and Neiman’s shops and web sites.”

Tracy Margolies, who was chief merchandising officer for Saks, has been appointed president of Bergdorf Goodman. She succeeds Darcy Penick. Margolies, who earlier than becoming a member of Saks labored at Bergdorf’s, has been “a key companion of mine,” Metrick mentioned. “Tracy’s deep experience and monitor document of main results-driven methods will propel Bergdorf Goodman into the longer term whereas honoring its distinctive legacy. I’m assured she is the suitable individual to steer this storied enterprise’ subsequent chapter and sit up for what Bergdorf Goodman will accomplish beneath her management.

“We’re going to do issues very otherwise,” Metrick added. “You’ll not see a few of the identical conventional roles, like chief service provider. Saks International plans to interrupt the mould in how we go to market and the way its enterprise runs.”

Metrick additionally underscored that Saks International will undertake AI “in the suitable locations for larger personalization and to maximise the client expertise.”

Others leaving Neiman’s because of the acquisition embody Geoffroy van Raemdonck, NMG’s CEO; Ryan Ross, president of Neiman’s and head of NMG buyer insights; Lana Todorovich, chief merchandising officer at Neiman’s, and Katie Anderson, NMG’s chief monetary officer.

“The massive takeaway first is that we imagine there’s a ton of expertise at Neiman Marcus Group,” Metrick mentioned. “After we get into the mixing as we transfer ahead, there shall be plenty of cross pollination between the businesses.”

He identified that Invoice Bine, NMG’s former chief provide chain officer, will fill the brand new function of chief transformation officer of Saks International. “A extremely strategic, results-oriented government, Invoice’s important expertise main large-scale enterprise transformation and operations in retail shall be instrumental to our integration journey,” mentioned Metrick.

Additionally, some modifications in how the deal to purchase Neiman’s ended up being structured have been disclosed. Sources had mentioned that Baker was speeding to button down financing for the deal, even inside the previous couple of weeks. A part of the problem was the excessive rate of interest being charged on the preliminary loans Baker was being offered within the deal – sources mentioned it was initially set at 11 p.c and with rates of interest coming down he was anxious about discovering cheaper financing.

Earlier this month, Saks issued a $2.2 billion bond, changing the upper charge financing that will have come from personal fairness big Apollo. However Amazon and Salesforce proceed as traders, together with Genuine Manufacturers Group in addition to G-III Attire Group, which extra lately got here in as traders. Saks didn’t specify how a lot every of the 4 corporations contributed.

Saks, for a number of seasons now, has been delinquent on funds to many distributors. However Metrick instructed WWD that the transaction “recapitalizes the corporate and places us in a significantly better money place and significantly better place working the enterprise.”

Metrick additionally mentioned that beginning in January, “We’ll start the method to work by means of the delayed funds. It would start the primary week of January. That’s when the method begins.”

Sources mentioned Saks in some circumstances is months behind in funds and that in lots of cases main distributors would ship merchandise to the retailer provided that they acquired some cost, or cost up entrance. Whereas a lot of the main luxurious manufacturers function at Saks beneath concessions, different corporations in trend and sweetness have been going through strain. Some magnificence corporations declined to ship to Saks shops, solely agreeing to ship to orders from Saks.com.

In his memo to the group on Monday, a duplicate of which was obtained by WWD, Baker wrote: “I’m happy to share that with the closing of the transaction, Saks International has larger monetary stability with much less leverage and a newly-funded revolving line of credit score, offering important ranges of obtainable liquidity. This monetary construction permits us to make investments to higher serve our clients and be a greater companion to our distributors.

“With the closing of the NMG transaction, HBC’s Canadian enterprise has been recapitalized as a standalone entity, separate from Saks International, with considerably decreased leverage,” Baker wrote. “HBC will proceed to function Hudson’s Bay shops and TheBay.com, in addition to proceed to personal or lease a 2 billion (Canadian) greenback actual property portfolio, both totally or with its three way partnership companion, RioCan Actual Property Funding Belief. With a brand new monetary construction, HBC’s Canadian enterprise shall be set to execute on its marketing strategy and greatest serve its loyal Canadian clients.”

Metrick additionally issued a memo, a duplicate of which was obtained by WWD, wherein he wrote, “Bringing these iconic manufacturers collectively is a big step ahead for luxurious retail. As one firm, we have now a possibility to rework the best way we serve customers, mixing artwork and science to make sure every buyer’s expertise is unmistakably their very own. With deep relationships throughout the business, cutting-edge personalization and strategic know-how partnerships, we’re poised to drive innovation and development. I sit up for working with the various gifted leaders and staff from NMG and throughout Saks International as we embark upon our journey to carry these companies collectively.”

Whereas the deal creates a luxurious retail empire in America, it raises numerous questions on potential consolidations involving capabilities, shops and personnel. Requested about consolidations, Metrick replied, “That is about transformation, not consolidation. It’s about development…There are redundant capabilities which can be going to be rationalized. Will probably be a course of we undergo over time.”

As beforehand reported, Saks plans to shut its retailer on Value Avenue in Palm Seashore, Fla., subsequent yr, and is intently reviewing the Saks and Neiman Marcus retailer fleets.

Different Neiman’s executives departing the enterprise are Eric Severson, chief folks, ESG and belonging officer; Ann Marie Janke, chief know-how and knowledge officer; Tiffin Jernstedt, chief communications officer, and Tom Mattei, chief authorized officer, company secretary, chief compliance officer.

In January, Metrick is scheduled to host a Saks International city corridor for the newly mixed group. Particulars shall be revealed quickly.

Underneath the mixed group, Metrick has 11 senior officers reporting to him, together with Bine, Margolies, and Essner in addition to Kim Miller, president of Saks Off fifth; Rob Brooks, chief working officer; Larry Bruce, president of shops for Saks and Neiman’s; Sarah Garber, chief folks officer; Sarah Garber, chief folks officer; Mike Hite, chief know-how officer; Caroline McMurray, vp of technique; Jeff Pedersen, chief monetary officer, and Andrew Woodworth, chief authorized officer.