NEW YORK — The parent company of Saks Fifth Avenue has entered into a deal to acquire luxury rival Neiman Marcus for $2.65 billion.
The new entity will be called Saks Global and will consist of the Saks Fifth Avenue and Saks OFF 5TH brands, Neiman Marcus and Bergdorf Goodman, as well as the real estate assets of Neiman Marcus Group and HBC, a holding company that acquired Saks in 2013.
The pact was announced Thursday after months of rumors that the department store chains were negotiating a deal.
The Wall Street Journal was first to report on the pending deal on Wednesday.
Both Saks and Neiman Marcus have struggled as shoppers have retreated from luxury goods and shifted their spending toward experiences like travel and fine dining. The two iconic luxury purveyors have also faced stiffer competition from luxury brands that are increasingly opening their own stores. The deal would help reduce operating costs and create more bargaining power with suppliers.
Saks Fifth Avenue currently has 39 stores in the U.S., including its flagship in Manhattan. In early 2021, Saks has split off its website into a separate company, hoping to expand that business at a time when more and more people are shopping online.
Neiman Marcus bankruptcy protection applied for in May 2020 during the early months of the coronavirus pandemic, but came into being in September of that year. Like many of its peers, the privately owned department store chain was forced to temporarily close its stores for several months.
Meanwhile, other department stores are under pressure to keep growing their sales.
Narrative Gentleman & Tailor announced in late August 2020 that it would close all of its stores after filing for bankruptcy earlier that month. It operates online. Macy’s announced in February of this year that it will close 150 non-productive stores of the same name over the next three years, 50 of which by the end of the year.
Consumers have shown resilience and ready to shop even after a period of inflation, although behavior has changed, with some Americans trade down to cheaper goods.
According to Saunders, a deal between the two luxury retailers is not the solution to all problems, especially if high-end consumers want to buy luxury goods online or in the stores of luxury brands.
“As a larger entity, the negotiating power with the brands will be somewhat greater, but even a combined chain would not be able to counter the heft and power of the global luxury conglomerates, which still hold most of the cards,” Saunders said. “Therefore, there is a risk that the deal will ultimately create an even bigger headache for Saks.”
