NEW YORK (AP) — The parent company of Saks Fifth Avenue has signed a deal to buy upscale rival Neiman Marcus Group, which owns Neiman Marcus and Bergdorf Goodman stores, for $2.65 billion, with online behemoth Amazon holding a minority stake.
The new entity will be called Saks Global, creating a luxury powerhouse at a time when the arena has become increasingly fragmented with different players, from online marketplaces that sell luxury goods to upscale fashion and accessories brands opening up their own stores.
The new organization will comprise 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 purchased Saks in 2013.
The stores will continue to operate under their own brand names.
HBC has secured $1.15 billion in financing from investment funds and accounts managed by affiliates of Apollo, and a $2 billion fully committed revolving asset based loan facility from Bank of America, which is the lead underwriter, Citigroup, Morgan Stanley, RBC Capital Markets, and Wells Fargo.
The deal was announced Thursday after the two department store chains had been in negotiations for about a year. But the twist is Amazon’s minority stake, which adds “a bit of spice” to an otherwise anticipated pact, according to Neil Saunders, managing director of GlobalData, a research firm. Amazon will be working with Saks Global to offer its expertise in logistics and personalization technology. Salesforce, a cloud-based software powerhouse, will also become an investor at closing.
The Wall Street Journal first reported the impending deal Wednesday.
“For years, many in the industry have anticipated this transaction and the benefits it would drive for customers, partners and employees," said Richard Baker, HBC executive chairman and CEO in a statement. “This is an exciting time in luxury retail, with technological advancements creating new opportunities to redefine the customer experience, and we look forward to unlocking significant value for our customers, brand partners and employees."
Marc Metrick, who is CEO of Saks' e-commerce business, will become CEO of Saks Global. He told The Associated Press on Thursday during a phone interview that consumers are increasingly demanding more access to designer product, easier ways to shop and more personalized experiences.
“This type of combination was the next move to make in order to put Saks, Neiman Marcus and Bergdorf Goodman where they need to be for the consumer, ” he said.
Both Saks and Neiman Marcus have struggled as shoppers have been pulling back on buying high-end goods and shifting their spending toward experiences, like travel and upscale restaurants. The two iconic luxury purveyors have also faced stiffer competition from luxury brands, which are increasingly opening their own stores.
The deal should help reduce operating costs and create more negotiating power with vendors. The new entity will also give shoppers better access to more designers, particularly up-and-coming ones as it will have more financial flexibility. Shoppers will also see their experiences more personalized through improved use of artificial intelligence, Metrick said.
Saks Fifth Avenue currently operates 39 stores in the U.S., including its Manhattan flagship. In early 2021, Saks spun off its website into a separate company, with the hopes of expanding that business at a time when more people were shopping online.
Neiman Marcus filed for bankruptcy protection in May 2020 during the first months of the coronavirus pandemic but emerged in September of that year. Like many of its peers, the privately held department store chain was forced to temporarily close its stores for several months.
Meanwhile, other department stores are under pressure to keep increasing sales.
Storied Lord & Taylor announced in late August 2020 it was closing all its stores after filing for bankruptcy earlier that month. It's operating online. Macy’s announced in February of this year that it will close 150 unproductive namesake stores over the next three years including 50 by year-end.
Consumers have proven resilient and willing to shop even after a bout of inflation, though behaviors have shifted, with some Americans trading down to lower-priced goods.
A deal between the two luxury retailers does not resolve all the issues, especially when high-end shoppers are looking to buy luxury goods online or at luxury brands' own stores, Saunders said.
“As a larger entity, negotiating power will be a little better with the brands, but even a combined chain would not match the heft and power of the global luxury conglomerates, which would still hold most of the cards,” Saunders said. “As such, there is a risk that the deal might end up creating an even bigger headache for Saks.”
Saunders noted that Amazon's stake in the business makes sense, as it has ambitions to play more heavily in the luxury arena. Saunders said Amazon could use its ability to streamline logistics and e-commerce and create an advantage for the new entity in a market where online shopping has become more important to shoppers — especially younger ones, which both chains need to do more to attract, he said.
Saks Global will also include HBC’s U.S. real estate assets and Neiman Marcus Group’s real estate assets, creating a $7 billion portfolio of retail real estate assets in top-tier luxury shopping destinations. Ian Putnam, currently president and CEO of HBC Properties and Investments, will become CEO of Saks Global Properties and Investments, which will manage the company’s portfolio of assets.
Both Metrick and Putnam will report to Baker, who will serve as executive chairman of Saks Global.
FILE - Shoppers walk into the Neiman Marcus retail department store at NorthPark shopping center in Dallas, March 30, 2023. The parent company of Saks Fifth Avenue has signed a deal to buy upscale rival Neiman Marcus for $2.65 billion. The buyout was announced Thursday, July 4, 2024, after months of rumors that the department store chains had been negotiating a deal. (AP Photo/LM Otero, File)
FILE — A Saks & Company doorman opens the 50th Street store entrance for customers, in New York, May 21, 1996. The parent company of Saks Fifth Avenue has signed a deal to buy upscale rival Neiman Marcus for $2.65 billion. The buyout was announced Thursday, July 4, 2024, after months of rumors that the department store chains had been negotiating a deal. (AP Photo/Richard Drew, File)
A Neiman Marcus sign is shown in San Francisco, Sunday, March 17, 2024. The parent company of Saks Fifth Avenue has signed a deal, Thursday, July 4, 2024, to buy upscale rival Neiman Marcus for $2.65 billion.(AP Photo/Jeff Chiu)
France votes Sunday in pivotal runoff elections that could hand a historic victory to Marine Le Pen’s far-right National Rally and its inward-looking, anti-immigrant vision — or produce a hung parliament and years of political deadlock.
Sunday’s snap elections in this nuclear-armed nation have potential impact on the war in Ukraine, global diplomacy and Europe’s economic stability. And they’re almost certain to undercut President Emmanuel Macron for the remaining three years of his presidency. France could have its first far-right government since the Nazi occupation in World War II if the National Rally wins an absolute majority and its 28-year-old leader Jordan Bardella becomes prime minister.
Racism and antisemitism have marred the electoral campaign, along with Russian cybercampaigns, and more than 50 candidates reported being physically attacked — highly unusual for France. The government is deploying 30,000 police on voting day.
The second-round voting began Saturday in France’s overseas territories from the South Pacific to the Caribbean, Indian Ocean and North Atlantic. The elections wrap up Sunday at 8 p.m. (1800 GMT) in mainland France. Initial polling projections are expected Sunday night, with early official results expected late Sunday and early Monday.
Here’s the latest:
Prime Minister Gabriel Attal cast his ballot in the Paris suburb of Vanves Sunday morning.
Macron is expected to vote later in the seaside town of La Touquet, while Le Pen is not voting after winning her district in northern France outright last week. Across France, 76 other candidates secured seats in the first round, including 39 from her National Rally and 32 from the leftist New Popular Front alliance. Two candidates from Macron’s centrists list also won their seats in the first round.
Voting opened Sunday in mainland France for the second round of high-stake legislative elections that have already seen the largest gains ever for the country’s far-right National Rally party.
French President Emmanuel Macron took a huge gamble in dissolving parliament and calling for the elections after his centrists were trounced in European elections on June 9. The first round on June 30 saw the largest gains ever for the anti-immigration, nationalist National Rally, led by Marine Le Pen. Sunday’s vote determines which party controls the National Assembly and who will be prime minister.
If support is further eroded for Macron’s weak centrist majority, he will be forced to share power with parties opposed to most of his pro-business, pro-European Union policies.
The second-round voting began Saturday in France’s overseas territories from the South Pacific to the Caribbean, Indian Ocean and North Atlantic. The elections wrap up Sunday at 8 p.m. (1800 GMT) in mainland France. Initial polling projections are expected Sunday night, with early official results expected late Sunday and early Monday.
Opposition parties made hurried deals ahead of Sunday's second round of voting to try to block a landslide victory for Marine Le Pen’s far-right National Rally in the legislative elections, as she said her party would lead the government only if it won an absolute majority — or close to it.
An unprecedented number of candidates who qualified for Round 2 from the left-wing alliance of the New Popular Front and from President Emmanuel Macron’s weakened centrists have stepped aside to favor the candidate most likely to win against a National Rally opponent.
According to a count by French newspaper Le Monde, some 218 candidates who were supposed to compete in the second round have pulled out. Of those, 130 were on the left, and 82 came from the Macron-led centrist alliance Ensemble.
A voter, left, casts his ballot for the second round of the legislative elections, Sunday, July 7, 2024 in Paris. France votes Sunday in pivotal runoff elections that could hand a historic victory to Marine Le Pen's far-right National Rally and its inward-looking, anti-immigrant vision — or produce a hung parliament and years of political deadlock. (AP Photo/Louise Delmotte)
French Prime Minister Gabriel Attal, leaves the polling booth before voting for the second round of the legislative election, Sunday, July 7, 2024 in Vanves, outside Paris. Voting has begun in mainland France on Sunday in pivotal runoff elections that could hand a historic victory to Marine Le Pen's far-right National Rally and its inward-looking, anti-immigrant vision — or produce a hung parliament and years of political deadlock. (Alain Jocard, Pool via AP)
A man picks up ballots in a the voting station during the second round of the legislative elections, Sunday, July 7, 2024 in Olwisheim , eastern France. France votes Sunday in pivotal runoff elections that could hand a historic victory to Marine Le Pen's far-right National Rally and its inward-looking, anti-immigrant vision — or produce a hung parliament and years of political deadlock. (AP Photo/Jean-Francois Badias)
A voter places his ballot in the envelope during the second round of the legislative elections, Sunday, July 7, 2024 in Paris. France votes Sunday in pivotal runoff elections that could hand a historic victory to Marine Le Pen's far-right National Rally and its inward-looking, anti-immigrant vision — or produce a hung parliament and years of political deadlock. (AP Photo/Louise Delmotte)
A man votes in the second round of the legislative elections, Sunday, July 7, 2024 in Strasbourg, eastern France. France votes Sunday in pivotal runoff elections that could hand a historic victory to Marine Le Pen's far-right National Rally and its inward-looking, anti-immigrant vision — or produce a hung parliament and years of political deadlock. (AP Photo/Jean-Francois Badias)
A voter leaves the voting booth before voting in the second round of the legislative elections, Sunday, July 7, 2024 in Strasbourg, eastern France. France votes Sunday in pivotal runoff elections that could hand a historic victory to Marine Le Pen's far-right National Rally and its inward-looking, anti-immigrant vision — or produce a hung parliament and years of political deadlock. (AP Photo/Jean-Francois Badias)
A woman casts her ballot in the second round of the legislative elections, Sunday, July 7, 2024 in Strasbourg, eastern France. France votes Sunday in pivotal runoff elections that could hand a historic victory to Marine Le Pen's far-right National Rally and its inward-looking, anti-immigrant vision — or produce a hung parliament and years of political deadlock. (AP Photo/Jean-Francois Badias)
A voter takes ballots before voting in the second round of the legislative elections, Sunday, July 7, 2024 in Strasbourg, eastern France. France votes Sunday in pivotal runoff elections that could hand a historic victory to Marine Le Pen's far-right National Rally and its inward-looking, anti-immigrant vision — or produce a hung parliament and years of political deadlock. (AP Photo/Jean-Francois Badias)
FILE - French President Emmanuel Macron leaves the voting booth before voting in the early French parliamentary election, in Le Touquet-Paris-Plage, northern France, Sunday, June 30, 2024. Whatever the outcome of Sunday's runoff is, it's not expected to be a good news for Macron. French media have recently described an "end of reign" atmosphere at the Elysee presidential palace. (Yara Nardi, Pool via AP, File)
FILE - Far-right National Rally party president Jordan Bardella, right, leaves with far-right leader Marine Le Pen after a press conference, Monday, June 24, 2024 in Paris. Both Le Pen and Bardella have made clear that, in power, they would seek to rein-in Macron and exert themselves in defense, European and foreign affairs decision-making. (AP Photo/Christophe Ena, File)
Local city officials prepare voting kits for the legislative election in Strasbourg, eastern France, on Saturday, July 6, 2024. Voters face a decisive choice in the runoff Sunday of snap parliamentary elections that could produce the country’s first far-right government since the World War II Nazi occupation. (AP Photo/Jean-Francois Badias)
Local city officials prepare voting kits for the legislative election in Strasbourg, eastern France, on Saturday, July 6, 2024. Voters face a decisive choice in the runoff Sunday of snap parliamentary elections that could produce the country’s first far-right government since the World War II Nazi occupation. (AP Photo/Jean-Francois Badias)
