Saks Global said that it has secured $500 million in exit financing upon the company’s emergence from Chapter 11 and that it expects to file a plan of reorganization “in the coming weeks.”
In a press release issued Thursday, Saks said the $500 million would come from “a restructuring support agreement with an ad hoc group of its senior secured bondholders.”
The parent firm of Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman filed for Chapter 11 bankruptcy protection in January. At the time, Saks Global said it had $3.4 billion in debt.
After exiting Chapter 11, Saks will be “well-positioned” for a stable foundation and a retail strategy for its top-performing stores, with a high concentration of luxury shoppers, as well as stronger relationships with its vendors, according to the release.
“Achieving this important milestone underscores the progress we are making on our transformation and reflects our capital partners’ confidence in our go-forward vision, guided by our relentless devotion to the luxury customer,” said Geoffroy van Raemdonck, CEO of Saks Global, in a statement.
“As we advance the restructuring process and position Saks Global for the future, our focus remains on strengthening our brand partner relationships and delivering an expertly curated product assortment and personalized service for our luxury customers across Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman,” said van Raemdonck, a former Neiman Marcus CEO who came to Saks Global to lead its turnaround from Chapter 11.
A retail analyst who spoke with JCK says that while the restructuring is going well, Saks should be more conservative about when it will come out of bankruptcy—which is expected this summer, according to yesterday’s release from Saks.
“They would be better off saying, ‘A year from now, we’ll be fully out,’” says Glenn Glenn McMahon, managing partner at MAC McMahon Advisory Consulting. “Their optimism or bravado is because lenders and Saks Global are feeling confident that they have the right team in place for this, and I second that. They got a team in place quickly and they’re having critical conversations with vendors and lenders.”
McMahon notes that van Raemdonck was at the helm of Neiman Marcus when it went through Chapter 11 bankruptcy in 2020. “This is not his first rodeo,” says McMahon. “He’s well regarded and respected in the vendor community as well as the financial community. Everybody’s giving him room to breathe because he’s smart, he has good relationships, and he’s done this before successfully.”
Saks’ bankruptcy and late payments had damaged its relationship with vendors. The company said this week that it had used $1.75 billion in financing it received in February to pay vendors, and that more than 600 brands have resumed shipping goods to Saks stores. All its stores have remained opened during the Chapter 11 process.
Saks Global said that since the filing, customer spend per store visit has increased 6% and online sales rose 11% compared with the period last year. It also reported “significant improvements in full-price selling” across Saks Global’s stores.
“In a short period of time, we’ve taken decisive actions and made meaningful progress in stabilizing the business and strengthening our relationships with brand partners,” van Raemdonck said. “While it will take time to fully realize the benefits of this progress, our sales and inventory results continue to outperform our internal plans.
“This, along with the committed capital we have secured, provides us with sufficient liquidity to complete a successful restructuring and advance our ongoing transformation to ensure a strong future for Saks Global.”
(Photo: iStock/John M. Chase)
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