Hudson’s Bay Co., the parent company of Saks Fifth Avenue, is acquiring Neiman Marcus for $2.65 billion, the privately owned upscale retailers said in a joint announcement Thursday.
The combined entity will be named Saks Global and will have a combined portfolio of retail real estate assets worth $7 billion, HBC and Neiman said in a statement.
“We are thrilled to take this step to bring together these iconic luxury names, Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman,” HBC CEO Richard Baker said 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.”
The Wall Street Journal first reported the deal on Wednesday.
Amazon’s rare move
Amazon is pursuing the deal by taking a minority stake in Sachs Global. The acquisition is being financed by $2 billion raised by HBC, and affiliates of Apollo Global Management are offering $1.5 billion in debt.
Neil Saunders, a retail analyst at GlobalData, said the addition of luxury department store chains is not unexpected, adding that executives at Saks and Neiman’s have been exploring the possibility of working together “for some time.” But Amazon’s involvement “adds a little spice” to the combination because it would give the online retailer a foothold in the luxury sector.
“The real win here will be Amazon’s ability to streamline logistics and e-commerce, giving the new entity an advantage in a market where it has become more important for shoppers to shop remotely — particularly for younger shoppers, who both chains need to do more to attract.”
According to Bloomberg News, this investment in Neiman Marcus is Amazon’s first investment in a brick-and-mortar retailer since it acquired Whole Foods in 2017. Amazon declined to comment on the planned merger.
One of the oldest retailers in the country
Herbert Marcus Sr., his sister Carrie Marcus Neiman, and her husband A.L. Neiman opened the retailer’s first store in Dallas, Texas, in 1907. The company was sold Department store operator Broadway-Hale in 1969This set the stage for its expansion outside of Texas. Later, the Neiman Marcus Group came to own Harcourt General, which also published textbooks and owned movie theaters.
In 1999, Harcourt General spun off Neiman Marcus Stores and Bergdorf Goodman. Private equity firms TPG Capital and Warburg Pincus purchased the company in 2005 for $5.1 billion.
Today, the retailer has 36 Neiman Marcus stores, two Bergdorf Goodman stores, and five Last Call outlets in the US. Declared bankruptcy In May 2020, at the time it became one of the most high-profile retailers to close as the COVID-19 pandemic forced retailers to close across the United States; it emerged from court supervision nearly four months later after struggling with billions in debt.
Saks, based in New York City, was founded in 1924 and operates 39 stores in the U.S. In early 2021, the retailer spun off its website into a separate company to capitalize on a surge in online shopping due to the pandemic.
Hudson’s Bay — which also runs the Canadian department store chain Hudson’s Bay known as HBC and has a history dating back to 1670, bought Saks in 2013 for $2.9 billion including debt.
Both Saks and Neiman have struggled to spur growth in recent years. Although the expanded company will have more leverage in negotiating with brands, it will still struggle to compete with global luxury groups such as Kering and LVMH, which could ultimately “create even bigger headaches for Saks,” Saunders said.
Mark Metrick, the CEO of Saks’ e-commerce business, will become chief executive officer of Saks Global. He told The Associated Press in a phone interview Thursday that consumers are increasingly demanding access to designer products, easier ways to shop and a more personalized experience.
“This type of combination was the next step in putting Saks, Neiman Marcus and Bergdorf Goodman in a position where consumers need them,” he said.
-The Associated Press contributed to this report.
