Saks Is Ceding Ground to Luxury Rivals After Buying Neiman Marcus

Yahoo

07-07-2025

(Bloomberg) -- The $2.7 billion acquisition of Neiman Marcus by Saks Fifth Avenue's owner last year was supposed to create a luxury powerhouse. Instead, both department stores are losing customers and sales to competitors including Bloomingdale's and Nordstrom.
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Sales at Saks Fifth Avenue fell 16% during the quarter that ended in June from a year earlier, according to Bloomberg Second Measure, which tracks debit and credit purchases. During the same period, combined sales at Neiman Marcus and Bergdorf Goodman sank 10%. The slowdown accelerated over the three months, with June showing the biggest drop at the three retailers.
Meanwhile, sales at Bloomingdale's, owned by Macy's Inc., and Nordstrom Inc. both rose more than 10% during the same quarter, according to Second Measure.
The declining revenue figures show the magnitude of the challenges facing Saks Global, as the combination of the department store chains is called. The closely held company is trying to reverse the sales decline and just took on more debt in part to pay vendors $275 million in overdue bills.
Bloomberg Second Measure data may not fully capture the sales trends at these retailers because it analyzes more debit than credit card purchases. Shoppers at Neiman Marcus, Bergdorf Goodman and Saks customers often use credit cards more frequently than middle-income shoppers at other outlets.
That means the sales slowdown in the Bloomberg Second Measure data could be sharper than it really is. And the sales increase could appear stronger at Bloomingdale's and Nordstrom, where more shoppers use debit cards.
But the Bloomberg Second Measure data is still helpful to show the trajectory of revenue trends. In June, sales fell 28% at Saks and 26% at Neiman Marcus and Bergdorf Goodman. At Bloomingdale's, sales rose 13%.
After Saks borrowed $2.2 billion in December to finance its acquisition of longtime rival Neiman Marcus, executives had planned to spend this year working to combine the two iconic chains, cutting costs and streamlining technology and supply-chain operations to position the new juggernaut to take an even greater share of luxury spending in the US.
But the company has also been contending with some vendors who are slowing or holding back their shipments, worried about not getting paid. Investors, concerned about Saks' ability to pay its bills, have sent the price of its bonds plummeting in recent months.
The challenges aren't all homegrown. The broader luxury sector is undergoing a slowdown, too. That's hit sales at LVMH Moët Hennessy Louis Vuitton SE and Gucci owner Kering SA — brands that sell large quantities of products at Saks Global.
Saks Global has seen green shoots recently, including an uptick in vendor shipments after the company secured new financing. It expects 'this trend to continue as we execute on our plan to begin paying outstanding balances in July,' a Saks Global spokesperson said in a statement. 'As inventory flow approaches normalized levels, we are confident that we can deliver for our customers.'
Also, Saks' recently launched storefront on Amazon.com is starting to show a positive response, the spokesperson said.
Client Complaints
Even if Saks repays overdue bills and persuades enough vendors to restart or increase their shipments of merchandise, the company still has another uphill battle: win back clients who have shifted their shopping to rivals in recent months or pulled back on spending altogether because of economic jitters.
Complaints about receiving orders in damaged boxes, charging for returns and rejected or delayed refunds from Saks and Neiman Marcus have increased since the beginning of the year, said Bloomberg Intelligence analyst Mary Ross Gilbert, who has looked through online reviews. That points to how Saks' efforts to conserve cash and cut costs are starting to undermine what's supposed to be a high-end shopping experience, she said.
'Bankruptcy risk remains given what appears to be a multitude of execution problems impacting customer experience,' Ross Gilbert said. 'It's just so much easier to shop elsewhere.'
Although online reviews about retailers in general skew negative, those raised about Bloomingdale's tend to focus on late package deliveries and are more benign than customers' frustration with Saks Global, Ross Gilbert said.
The Saks spokesperson said the company's fulfillment centers have implemented new processes that 'reduce the time for processing returns within 7 to 10 days, while ensuring customers receive high-quality merchandise in future orders.'
Saks Fifth Avenue has had steep revenue declines since early 2023, with sales falling an average of nearly 21% each quarter versus a year earlier, according to Bloomberg Second Measure.
At Neiman Marcus and Bergdorf Goodman, revenue trends have been choppier. Sales were up in the final quarter of 2024 and again in the first quarter of 2025 versus a year earlier, but then turned negative in the most recent one. Meanwhile, Bloomingdale's and Nordstrom have increased year-over-year sales every quarter during the last year.
Holiday Season
The pressure on Saks is particularly acute now because it's filling its warehouses and stores with products to sell during the crucial holiday season from November through January.
If vendors hold back on shipments to Saks now – because they don't want to risk not being paid or being paid late – that would leave the department stores without enough luxury goods on shelves during the holiday shopping season, which would likely accelerate shoppers' shift to Bloomingdale's and Nordstrom.
Saks is using $600 million in fresh financing to start to make $275 million in overdue payments to brands this month and, separately, is starting to pay them for new products they've shipped since the beginning of the year.
'We're in the window where, I think, investors and brands are looking to see how the proposed game plan is actually going to play out in real life,' said Jeff Abrams, founder and chief executive officer of Los Angeles apparel company Rails, which sells its products at Saks. 'This next month or two will be very telling.'
Rails has continued to ship merchandise to Saks despite being owed a couple million dollars because Abrams sees an opportunity to expand the availability of Rails products at the department store as other brands scale back, wary of not getting paid. But Abrams is also continuing to open up more Rails stores across the US in part to be less reliant on selling its products at third-party retailers.
Rails has started to receive some recent payments from Saks, via its financial intermediary, called a factor, which guarantees orders from retailers.
Vendors, particularly smaller ones that have less financial room to maneuver, are between a rock and a hard place with Saks. To ship or not to ship, that's the question they're asking themselves. They don't want to risk more unpaid bills but, at the same time, Rails and others want Saks – which needs more inventory – to succeed.
'If Saks can stabilize and thrive,' Abrams said, 'that benefits us and many other vendors as well.'
--With assistance from Matt Townsend.
(Updates with additional context starting in fifth paragraph.)
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