In a move that would 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, creating the ultimate high-end department store behemoth, two people close to the negotiations said on Wednesday.
The deal, which had been rumored since Neiman Marcus filed for bankruptcy protection during the pandemic, comes just over four years after Saks bought the license for the Barneys name following the bankruptcy of that group. It also follows a wave of luxury e-tail failures, including that of FarFetch and Matches.com. Saks is owned by HBC, a retail conglomerate that bought the American chain in 2013 — the year after HBC also acquired Lord & Taylor.
The acquisition of Neiman Marcus makes Saks Global, as the new group will be called, the 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 rivals in the United States will be Macy’s, which also includes Bloomingdale’s, and Nordstrom. It will be run by Marc Metrick, the current chief executive of Saks and Saks.com, one of the people said.
The two retailers have long been viewed as potential matches, given their overlapping customer base of high-end customers. But each has struggled financially, posing significant complications for their efforts over the years to combine.
What may have helped seal the deal is some help from Amazon, which is taking a minority stake in Saks Global, the two people said. HBC, which also owns the Canadian department store chain Hudson’s Bay, is financing the acquisition with $2 billion it has raised from existing investors. while affiliates of the investment firm Apollo Global Management are providing $1.5 billion in debt.
Analysts said they also expect the retailers will be able to save some costs by combining.
“There will be efficiencies, without a doubt,” said Robert Burke, the founder of a luxury retail consulting firm. “Retail has been sluggish lately, and maybe there will be more investment in both stores than there has been in the past. The real question will be how do the brands react to this? Especially the LVMH and Kering brands.”
