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Dive Brief:
- Saks Global on Wednesday filed for Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas. The move comes after a year of financial struggles following a $2.7 billion deal to merge Saks Fifth Avenue and the Neiman Marcus Group.
- Former Neiman Marcus Group CEO Geoffroy van Raemdonck on Tuesday took over as CEO, replacing Executive Chairman Richard Baker, the company said by press release. Baker replaced Marc Metrick in the role less than two weeks ago.
- The luxury department store company enters bankruptcy court with a $1.75 billion financing package, including $1.5 billion from an ad hoc group of its senior secured bondholders and about $240 million of incremental liquidity from its asset-based lenders.
Dive Insight:
Saks Global’s new CEO is already shaking up the leadership team, with a slate of executives that includes people who previously worked with him at Neiman Marcus.
Darcy Penick is president and chief commercial officer, overseeing stores, marketing, buying, digital, analytics and customer care. Lana Todorovich is chief of global brand partnerships. Brandy Richardson, who served as chief financial officer alongside van Raemdonck at Neiman Marcus Group, was named CFO in July and remains at Saks Global.
“This is a defining moment for Saks Global, and the path ahead presents a meaningful opportunity to strengthen the foundation of our business and position it for the future,” van Raemdonck said in a statement. “In close partnership with these newly appointed leaders and our colleagues across the organization, we will navigate this process together with a continued focus on serving our customers and luxury brands.”
Making amends with those brands is a priority, according to Glenn McMahon, managing partner at MAC Advisory and Consulting and a turnaround expert. Saks Global is behind in paying many vendors, and some have abandoned the retailer or slowed shipments. The problem hurt sales in Q2 and probably impeded holiday inventory plans, analysts say.
Van Raemdonck is respected by vendors and has many close relationships, McMahon said.
“He has good communication, good relationships in the market,” McMahon said by phone. “There are a lot of vendors, though, and he’s not going to be able to satisfy all of them. I think job one is to meet with the vendor community and meet with all the creditors, the landlords. I’m assuming the board and Geoffroy already have some initial ideas. It’s not like this is something that happened overnight.”
Bigger picture, the exit of the team that led Saks Global bodes well, though a turnaround will take years, according to GlobalData Managing Director Neil Saunders.
“If there is one positive from the bankruptcy, it’s that the previous management team has been cleared out,” he said in emailed comments. “They bear responsibility for the mess and their reputation with vendors and associates at the firm is thoroughly tarnished. The comeback of Geoffroy van Raemdonck is a sensible choice as he understands retail, luxury, and the brands the group owns. Even so, he will have his work cut out for him to get things back on track.”
The stores and e-commerce sites run by Saks Global’s retailers — Saks Fifth Avenue, Neiman Marcus, Bergdorf Goodman, Saks Off 5th, Last Call and Horchow — remain open to customers, the company said Wednesday. However, Saks Global has asked to reject several leases, according to court filings, and many analysts expect several locations to close.
