Saks Global And Authentic Seek To Take Control Of Luxury Market
Saks Global and Authentic Brands Group are looking to diversify their partnership into retail, hospitality and events as they seek to exert more control over the luxury market.
Over six months on from the creation of the joint venture, Authentic Brands Group CEO Jamie Salter and Saks Global Executive Chairman Richard Baker chose London to outline their plans as they spoke on stage at last week's World Retail Congress.
The duo said that they believed the partnership could drive higher margins, wrest control of luxury away from vendors and towards retail and leverage the brand strength of department store group Saks – which includes Saks Fifth Avenue and Saks Off 5th, Neiman Marcus, and Bergdorf Goodman – to form global partnerships.
'We wanted to get into the luxury space but it's all about distribution,' said Salter. 'When we look at brands, what is really important with us is that they can make the right margin. If you look at the business model today, margin is everything. Getting together with Saks was critical for us. If you are not making low to high 60s [per cent]
Authentic Luxury Group is a 50/50 joint venture between Authentic Brands and Saks Global and several luxury brands, plus Barneys New York. Salter stressed that for the retailer it meant it gained revenue via sales of merchandise plus 50% of the rent received as he likened the deal to another partnership Authentic had entered into with U.S. mall landlord giants Simon Properties and Brookfield for retail tenants in terms of a royalties and rents model.
'The model truly works. But we're not just in retail, we're also in hospitality business, we'll see Saks branded residences going out, which also means people will buy home products from Saks for those. We already have projects on the go, and have people in the Middle East and Asia Pacific looking at doing a Saks store, a condo and a hotel,' he said.
Baker said that the combined businesses under the Saks umbrella accounted for 60% of premium sales in the U.S. and said that the acquisitions to create the new department store group came after long negotiations with 'an industry that was getting weaker and weaker and finally capitulated'.
Saks has launched a so-called 'walled garden' on Amazon in North America and is also building out sites for Japan, China, the U.K. and Middle East.
'When we sit here in five years luxury is going to be natural on Amazon,' he insisted. 'We needed to bring the department stores together for efficiency, with $600 million of synergies achieved. We also had to right size our vendor matrix, because we had 2,660 vendors and we had to reset vendor relationships.'
Baker said that without making big decisions 'there would be no [department store] industry left in the U.S.' and said that Saks expects to edit 500-600 brands out of its supply relationships, with a shift towards 'controlled brands', which offer the retailer a larger margin, aiming at circa 20% of total sales from these product ranges.
Salter added that combining the two company's customer bases would also help propel the joint venture business.
'Data is critical, that tells us what brands are working and what brands are not working, which gives us such an edge in the competition. Let's us dig into the data,' he said. 'We believe we will be able to take this all over the world and find partners. In luxury the power has been at the vendor level and we need to shift it towards the retail level.'
Generating more than $32 billion in global annual retail sales, Authentic's brands are present in 150 countries, including over 13,000 stores and shop-in-shops and 400,000 points of sale.
Its brand portfolio includes Shaquille O'Neal, David Beckham, Sports Illustrated, Thalia, Reebok, Champion, Brooks Brothers, Barneys New York, Judith Leiber Couture, Ted Baker, Hunter, Vince, Hervé Léger, Frye, Nautica, Juicy Couture, Aéropostale, Forever 21, Nine West, Eddie Bauer, Quiksilver, Billabong and Van Heusen.
Saks Global is owned by Hudson's Bay Company, while Amazon also invested an undisclosed amount in the new entity when it was formed in December last, alongside Salesforce and software investing firm Insight Partner, plus Authentic Brands Group, which all agreed to be minority partners.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
18 minutes ago
- Yahoo
Dollar General Stock Just Popped, but Is the Worst Really Behind It?
Dollar General is starting to benefit from more affluent customers trading down on their shopping choices. However, its core customer base remains under pressure. The stock, meanwhile, is no longer in the bargain bin after a strong rally. 10 stocks we like better than Dollar General › Dollar General (NYSE: DG) has struggled in recent years, as inflationary pressures hurt its lower-income consumer base. However, the stock staged a strong rally following its fiscal first-quarter earnings report. As of this writing, it is up 50% in 2025. Let's take a closer look at its most recent earnings report and commentary to see whether this rally is sustainable or if the worst is not really behind it just yet. On the surface, tariffs would seem to be a big negative for a company like Dollar General. After all, the retailer's core customer base was already feeling pressure from higher prices due to inflation, and it looked like it was losing share to big-box price leader Walmart (NYSE: WMT). However, the company has begun to see more higher-income consumers frequent its stores in search of value. The retailer said it plans to minimize the impact of tariffs on its gross margins as much as possible without raising prices, although it could increase prices as a last resort. It plans to do this by working with vendors to cut costs, moving some manufacturing to other countries, and tweaking its product lineup by making changes or swapping out certain items. It noted that a mid- to high-single-digit percentage of its overall purchases are directly imported from China, but about double that percentage comes indirectly from the country. The inroads with higher-income consumers contributed to a 2.4% increase in same-store sales in the quarter. While traffic fell by 0.3%, its average checkout ticket rose by 2.7%. Growth came from gains in the food, seasonal, and home & apparel categories. Same-store sales is a very important metric for Dollar General, as it has said in the past that it needs to grow its comparable-store sales by around 3% for it to leverage its expenses and grow its earnings. However, the composition matters, and growth from high-margin areas, such as seasonal items, helped power its earnings higher. This appears to be largely a reflection of higher-income consumers shopping at its locations, as well as its efforts to improve the customer experience and offer better merchandising in categories such as seasonal decor and home items. The company also said that its newer pOpshelf store concept -- which is meant to provide a fun and affordable shopping experience with a focus on home goods, seasonal decor, and party supplies -- performed well, exceeding expectations. Overall, Dollar General's revenue rose 5% year over year to $10.4 billion, while its earnings per share (EPS) jumped 8% to $1.78. That was well ahead of the analyst consensus of $10.3 billion in revenue and adjusted EPS of $1.48. Gross margin increased 78 basis points to 31%, helped by lower shrink and higher inventory markups. Shrink is the amount of merchandise that gets lost, damaged, spoiled, stolen, or just generally can't be sold, and the company has been working hard to improve this metric. Looking ahead, Dollar General raised its full-year guidance. It now expects revenue to grow between 3.7% and 4.7%, with same-store sales increasing between 1.5% and 2.5%. That's up from a prior outlook of revenue growth of 3.4% to 4.4% on comparable-store growth of 1.2% to 2.2%. Meanwhile, it raised the low end of its full-year EPS guidance to a range of $5.20 to $5.80, up from a previous forecast of between $5.10 and $5.80. It said that the guidance assumes that current tariff rates remain in place. Metric Prior Guidance Current Guidance Revenue growth 3.4% to 4.4% 3.7% and 4.7% Same-store sales growth 1.2% to 2.2% 1.5% and 2.5% Earnings per share $5.10 to $5.80 $5.20 to $5.80 Source: Dollar General. The company is also looking to add 575 new store openings in the U.S. this year and up to 15 in Mexico. Dollar General appears to be benefiting from the trade-down effect this year. This is something Walmart has been experiencing for a while, but something dollar stores like Dollar General had previously been missing out on. It was only last year that these companies were talking about how the current environment was one of the most difficult periods in their histories. And for dollar stores' core customer bases, things may actually be worse now with tariffs than they were last year. As such, whether Dollar General can continue to turn the corner likely depends largely on whether it can keep the higher-income customers that have begun to visit its stores and continue to attract new ones. Right now, the company is seeing these new customers visit more often and spend more money per visit. Its remodeling efforts, along with initiatives like its mobile app and own same-day delivery service and partnership with DoorDash, are also likely helping attract more affluent consumers. From a valuation perspective, the retailer now trades at a forward price-to-earnings (P/E) ratio of 20 based on analyst estimates for fiscal year 2025 (ending January 2026). That valuation shows the stock is no longer in the bargain bin. While Dollar General has made a lot of progress -- with its core consumer still very stressed -- I don't want to chase this rally at its current valuation. Before you buy stock in Dollar General, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Dollar General wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,395!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $858,011!* Now, it's worth noting Stock Advisor's total average return is 997% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends DoorDash and Walmart. The Motley Fool has a disclosure policy. Dollar General Stock Just Popped, but Is the Worst Really Behind It? was originally published by The Motley Fool Sign in to access your portfolio
Bloomberg
23 minutes ago
- Bloomberg
UK's Visa Crackdown Leaves City of London Immigrants in Limbo
One banker in the City of London is faced with paying an extra £40,000 a year in university fees for his children. Nursing homes are worried about finding enough caretakers for residents. The insurance industry says overseas relocations have now ground to a halt. Such is life in the UK after the government announced it would now take ten years for immigrants to receive preferential status known as indefinite leave to remain, or ILR. That's twice the time it used to take.
Yahoo
23 minutes ago
- Yahoo
Bus company welcomes plan to tackle city traffic
A bus company has welcomed council plans to develop proposals to tackle Oxford's "devastating" traffic. Oxford Bus Company previously urged Oxfordshire County Council to find a "Plan B", after the ongoing Botley Road closure delayed the authority's planned introduction of traffic filters. The council responded to this by confirming it would be drafting new plans to deal with the city's congestion problem. Luke Marion, the bus company's managing director, said he was "encouraged by the announcement" and "looked forward to engaging" with the council to "improve journeys" for bus users. "A robust bus network is critical in order for the Council to achieve its sustainability targets on the county's roads which we are wholly supportive of," Mr Marion said. "To further enhance the appeal of travelling by bus, we need journeys to be faster and more reliable than is currently possible. "Present levels of congestion are having a devastating impact on our city which we're keen to help resolve through positive discussion." Oxford Bus Company said journey times on the Abingdon Road had increased by an average of 17% since the Botley Road was closed, with services between Blackbird Leys and Oxford city centre slowing by 33% compared with 2013. Following Mr Marion's correspondence, the council confirmed that potential options to improve travel conditions would be discussed by the cabinet. The council had planned to introduce contentious traffic filters on several major roads in autumn 2024, but they were pushed back for another two years due to the ongoing closure of Botley Road. Labour councillor Brad Baines previously argued argued that the county council plans did "not answer questions about affordability of bus services or routes going where people need to go". "These are key barriers which are yet to be addressed or even considered." You can follow BBC Oxfordshire on Facebook, X (Twitter), or Instagram. Council urged for 'Plan B' to tackle congestion LTNs and cycle lanes cost council almost £4m City traffic filters postponed by Botley Road delay Oxfordshire County Council
