Saks Fifth Avenue’s parent company, HBC, announced on Thursday that it will buy Neiman Marcus, a luxury department store chain, for $2.65 billion. This purchase will give HBC more power in negotiating with suppliers and help them manage costs better. The deal comes as luxury retailers face reduced demand due to high interest rates and inflation, which has led customers to cut back on spending after a post-pandemic luxury retail boom.
HBC plans to create Saks Global, combining Saks Fifth Avenue, Neiman Marcus, and other luxury retail and real estate assets.
Neiman Marcus filed for bankruptcy in 2020 after the pandemic led to the closure of its stores across the U.S., severely impacting the company’s revenues. Neiman Marcus is known for selling high-end products like designer dresses, shoes, and handbags to wealthy customers.
It was reported on Wednesday that HBC had agreed to buy Neiman Marcus.
Marc Metrick, CEO of the e-commerce Saks business, will lead the new combined company. Saks Global will compete with Nordstrom, Bloomingdale’s, and Macy’s, which is reportedly in talks to sell itself for about $6.9 billion. Amazon and Salesforce will also invest in Saks Global, offering technology, logistics, and AI integration assistance.
Rhone Capital, an existing investor in HBC, will be the main investor in Saks Global. HBC is funding the deal with money from new and current shareholders and debt, with Apollo Global Management providing $1.15 billion in debt financing. HBC also secured $2 billion in debt financing from various Wall Street banks.
JPMorgan and Lazard acted as financial advisers to Neiman Marcus Group for this deal.
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