Buyers at Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman will be out and about this fashion month. The company confirmed to Vogue Business that Saks Global will have representation during fashion month to attend shows and place buys. It will be a season of earning back trust that was lost over the past year, as Saks’s retailers careened toward bankruptcy. The company filed for Chapter 11 on January 14.
Saks Global’s restructuring is taking place under new CEO Geoffroy van Raemdonck, who will work alongside newly appointed chief restructuring officer Mark Weinsten (who worked with van Raemdonck during Neiman Marcus’s 2020 bankruptcy, prior to the Saks merger). As well as righting Saks’s financial wrongs, van Raemdonck is tasked with repairing the retailer’s now-fraught relationships with the brands it stocks. Lana Todorovich, the former chief merchandising officer at Neiman Marcus, was named chief of global brand partnerships and will play a key role in mending those relationships.
Much is still up in the air, experts flag: whether Saks Global will restructure entirely; sell off brands like Bergdorf Goodman; close a significant amount of stores; or liquidate assets. This should become clearer soon, says Sarah Foss, global head of legal at financial consultancy Debtwire. The debtors are required to file their Chapter 11 plan of reorganization within 75 days of the bankruptcy filing. If the plan is approved by the court and the milestones aren’t extended, Saks will exit bankruptcy within 160 days of the filing, which would be early June.
On January 16, Saks announced that the judge overseeing the bankruptcy had granted interim access to financing, which would provide nearly $1.75 billion in new money. This is a step toward showing vendors that there is money in the bank to pay them, Foss says. And on January 29, some of the restructuring plan came to light: Saks announced that it will close the majority of its off-price Saks Off 5th locations and that those that remain open will serve primarily as a selling channel for residual inventory from Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman. Saksoff5th.com (a separate entity from Saks Global) will wind-down its operations. The emphasis, the announcement said, will be on full-price luxury sales, and “sustainable, profitable growth for its luxury retail brands and partners”.
That’s meant to send a vote of confidence to the brands who’ve been burned in the bankruptcy process. At the beginning of this week, on January 26, Gary Wassner, CEO of factor Hilldun Corporation, started approving orders — which had been on pause since December — after reaching an agreement with Saks on process and terms. It’s a net 30 terms agreement, meaning Saks has 30 days to pay Hilldun (which owns the invoices) the full amount from the day it receives the invoice.
Brands were “thrilled” to begin shipments, Wassner says, and doesn’t anticipate hesitation moving forward. “If we approve, they will ship,” he says. “We keep our clients as informed as possible of the progress and circumstances occurring with the Chapter 11. Should we have concerns in the future for any reason, we will inform them immediately. Our most important requirement is that we receive payments for our clients’ deliveries according to the agreements we have made with Saks.”
Neil Saunders, managing director of Globaldata’s US retail division, says that there are some reasons to be optimistic: Saks’s cash infusion means some payments will be resumed, and the management team responsible for the problems has exited. “[They’ve] been replaced by a team that is far more focused on retail,” he says. “Vendors are hopeful that this new team will take better care of them.”
Luxury consultant Robert Burke says van Raemdonck and his team’s deep industry relationships hold weight, and that they’ve already used these relationships to reassure brands that going forward, there is a strategy and they will be paid. “Because the brands are familiar with Geoffroy and his team, they have already started to get the confidence of the brands back,” he says. “Right now, it is about stability and moving forward.”
Rebuilding trust
Saks has a lot to prove to brands that have been burned by the company over the past year-plus. And it’s the smaller brands that are in a more precarious position. For Hilldun’s part (which mainly works with larger brands), the factor works with the team at Saks, and they prioritize the brand requests as to which brands’ shipments are approved when, Wassner says.
Smaller brands know that they’re unlikely to see payments from the recent $1.75 billion cash injection. “This first round of payments that the bank has released, that’s for lease payments like Chanel shop-in-shops and whatever,” one founder says. For these independent and emerging brands that are less likely to recoup their lost dollars, the decision now is whether or not to sell new collections to Saks Global retailers. One designer says that, because payments going forward are protected by the bank (now that Saks has filed for bankruptcy), the brand will move forward with orders. “This is a little scary, but I think I will continue forward and ship the pending order that I had with them for this spring and also keep appointments,” he says.
Another brand that met with Bergdorf Goodman this week came away feeling hopeful, its co-founder says. “They shared that Saks Global has capital currently available to support upcoming spring orders, with additional funding expected to come online in the near future,” the co-founder says. “They confirmed that they are legally obligated to pay brands according to the agreed terms for spring shipments and expressed openness to accelerating payment terms if requested.” The brand has decided to continue to work with Saks, but with a maximum order value cap to lessen the risk.
Some founders emphasize that the buyers they work with have been great throughout the process, acknowledging that the issues came from the top. “My buyers have been really kind and thoughtful through all of this. None of this is coming from them. They are working to maintain those relationships that they have built and invested in. So I’m very thankful for those relationships,” says jewellery designer Presley Oldham. But he also emphasizes that he’s conscious that the buck doesn’t stop with these buyers, and that these relationships don’t guarantee payment.
Ultimately, rebuilding trust is necessary, but won’t happen overnight, Saunders says. “That means communicating openly and honestly, keeping promises on payments and showing that Saks has some stability,” he says. “All of this will take time, but it’s critical as a chain like Saks relies on close vendor relations to operate the business.”
Boosting those relationships will take more than just payment, though this is the bare minimum. Moving forward, Saks will need to show brands that it is invested in their success at its stores. “Beyond payment, Saks need to show very active engagement with the brands with trunk shows, exclusive product, activate and engage with the VIC clients, and events for the brands,” Burke says. “This will demonstrate the commitment to the brands.” That Saks is closing its off-price ventures also bodes well for brands, as it implies that the company will be focusing on full-price sales channels. This is key for brands who are needing to recoup money lost via still-missing payments from before the bankruptcy.
Wassner hopes that Saks understands that its success moving forward relies on the brands with which it’s aiming to mend relationships. “[Saks needs to] recognize the critical value to their future success of the hundreds of brands we support and advocate for — and the independent brands who don’t have us behind them, nor the clout and seats at the table that the large fashion conglomerates have, both American and European.”
For designers, this understanding is top of mind. “[I hope the CEO] really recognizes that, particularly as younger slash independent designers who are working with such a mammoth company like Saks, we are essentially providing them with capital to run their business — be it monetary capital from consigned goods or social, cultural capital of being an up and coming designer,” one designer stocked at Bergdorf says. “That of course, is a symbiotic relationship. I also benefit, but I think we are in a different position than Chanel where they will not sink or swim because of the payments from Saks Global that are to be repaid. Whereas it could very much tank my business if we are not paid by them.”
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