Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Saks Fifth Avenue’s parent company is nearing a $2.65bn deal to buy its luxury department rival Neiman Marcus with the backing of tech giants Amazon and Salesforce, said two people with knowledge of the matter.
The deal, which follows months of complex negotiations, is set to combine two of the leading players in luxury retail under one roof and could buffer them from increased competition from other luxury behemoths such as LVMH, which owns brands including Dior and Louis Vuitton and increasingly sell directly to consumers.
Amazon and Salesforce would take minority stakes in the newly formed business, the two people said, an unusual foray by the tech giants into the luxury space. The leader of Saks’ ecommerce business, Marc Metrick, will join the newly formed company as chief executive.
The tie-up comes as luxury department stores, whose model relies on in-person sales at physical stores, grapple with shrinking market share. Shoppers now have options to buy directly through company websites, at brands’ own storefronts, or through e-retailers.
That pressure has sent several brands into financial distress: Neiman Marcus declared bankruptcy during the pandemic, along with Lord & Taylor. A tie-up between Saks’ parent company HBC, which also owns the Canadian department store Hudson’s Bay, has been speculated since Neiman Marcus emerged from bankruptcy later in 2020.
The newly formed business — to be called Saks Global — would be the biggest player in brick and mortar luxury storefronts, with about 75 main stores. Still, the new business will face fierce competition as customers flock directly to brands: LVMH has earned a market capitalisation of about $384bn.
HBC, which bought Saks more than 10 years ago, was financing the deal with a $2bn facility, one of the people said. Apollo Global Management was providing $1.15bn in debt.
The deal was first reported by The Wall Street Journal.