In a move to further consolidate the luxury retail market, the parent company of Saks Fifth Avenue has agreed to acquire Neiman Marcus in a $2.65 billion deal that will create the ultimate high-end department store, the companies announced Wednesday.
The deal, which has been rumored since Neiman Marcus filed for bankruptcy protection during the pandemic, comes four years after Saks bought the license for the Barneys name following the group’s bankruptcy. It also follows a wave of luxury e-tail failures including FarFetch and Matches.com. Saks is owned by HBC, a retail conglomerate Buy the American chain In 2013 – a year after HBC also acquired Lord & Taylor.
“Customers love to walk into a store,” Richard Baker, HBC’s chief executive and chairman, told The New York Times. “They live to touch the product and spend time with their personal shoppers.”
He added: “Part of what excited us about acquiring Neiman Marcus was acquiring their world-class sales force. People have forgotten how important people are. When selling luxury products, you need beautiful stores and salespeople who trust the customers.” have.”
The acquisition of Neiman Marcus makes Saks global, as the new group will be recognized as a dominant player in its market, with a combined 75 stores (including two Bergdorf Goodman locations), as well as 100 off-price outlets. The new group’s only real competitor in the United States will be Macy’s, which also includes Bloomingdale’s and Nordstrom. It will be run by Mark Metrick, the current chief executive of Saks and Saks.com.
The companies said they plan to invest in technology, including artificial intelligence, as well as legacy and emerging brands.
“Saks has remained steadfast in our commitment to being at the forefront of luxury fashion, helping customers not only where they are but where they are going,” said Mr. Metrick. “Together, with our continued focus on innovation, we are key to growing for our brand partners and creating career development opportunities for the incredible talent at Saks Global.”
The deal is also a vote in favor of the future of brick-and-mortar retail and a sign of the importance of trophy real estate as luxury conglomerates such as LVMH scour for prime retail properties. Mr. Baker, who has a background in real estate, will now control a company that includes a Saks flagship store in midtown Manhattan and a Bergdorf Goodman on Fifth Avenue. The new portfolio of companies will be worth $7 billion, the companies said.
The two retailers have long been seen as a potential match, given their overlapping customer bases of high-end customers. But each has struggled financially, creating significant complications for their efforts to get together over the years.
What could help seal the deal is some help from Amazon, which is taking a minority stake in Saks Global. HBC, which also owns Canadian department store chain Hudson’s Bay, is financing the acquisition with $2 billion raised from existing investors, while affiliates of investment firm Apollo Global Management are providing $1.5 billion in debt.
Mr. Baker said the company “is not planning to close any stores or digital businesses or reduce services in any way,” even though the two operate in the same markets.
Analysts said they expect retailers to be able to save other costs by combining.
“There will undoubtedly be efficiencies,” said Robert Burke, founder of a luxury retail consulting firm. “Retail has been sluggish recently, and there will probably be more investment in both stores than in the past. The real question will be how do brands react to this? Especially the LVMH and Caring brands.”
LVMH is a luxury conglomerate that owns Dior, Louis Vuitton and Fendi among other brands; Kering owns Gucci, Balenciaga and Saint Laurent. Both groups sell their goods at Saks and Neiman Marcus, but increasingly focus on driving customers to their own stores and e-commerce sites.
On the other hand, smaller independent brands, which have long relied on department stores to reach consumers across the country, will have less choice and power in negotiations with stores as well.
The Federal Trade Commission is paying close attention to consolidation among fashion retailers. In April, it have been moved to the block The planned acquisition of Capri (the group that owns Michael Kors, Versace and Jimmy Choo) by Tapestry (which owns Coach, Kate Spade and Stuart Weitzman). The agency argued that the planned consolidation would affect competition between different brands. The case is likely to go to court in September.
When it comes to the Saks-Nieman deal, Mr. Burke said, “I’m sure they’ll be looking at it closely.”