Inside Saks’ Struggle for Its Life: Chapter After a Yr of Disaster

In case you visited Saks Fifth Avenue — the century-old division retailer in Manhattan — only one month in the past, you’d have seen it was actually glowing, its façade embellished with 1000’s of glittering lights for the vacations.

Now, the twinkling has stopped, and the flowery vacation shows have been dismantled. Black paper covers the home windows.

Late on Tuesday, Saks International filed for Chapter 11 chapter within the Southern District of Texas.

It capped a tumultuous 13-month chapter for the corporate, which additionally owns Bergdorf Goodman and Neiman Marcus, that was marked by govt turnover and lawsuits, missed funds, and damaged guarantees.

By the tip of the 12 months, dozens of distributors — a few of which had not been paid in full for over a 12 months — had paused shipments to the corporate, leaving it with out the mandatory stock to outlive previous the vacation season, based on the chapter declaration.

What occurs subsequent might have penalties for purchasers. Shops might shut, and layoffs might comply with. Manufacturers, a lot of that are unsecured collectors and will by no means receives a commission again, are ready within the wings.

“It has been a curler coaster till now,” Gary Wassner, the CEO of Hilldun Corp., which acts as a kind of guarantor or insurer for manufacturers, instructed Enterprise Insider.

Hilldun represents about 140 manufacturers that promote to Saks — prior to now, it is labored with large names like Tommy Hilfiger, Marc Jacobs, and A.L.C. — and is owed about $66 million, Wassner mentioned.

“It is a aid at this level,” he mentioned. “I am lastly in a position to plan on tips on how to transfer ahead.”

A match made in luxurious hell

2025 was speculated to be an important 12 months for Saks.

For greater than a decade, the retailer, with its massive bodily footprint, had struggled to keep up its dominance as purchasing patterns shifted, with prospects turning to e-commerce or brand-owned shops. It wasn’t alone: Nordstrom was treading water earlier than it was taken personal, and Macy’s has endured a drawn-out turnaround plan.

Its issues intensified following the pandemic, when inflation and financial uncertainty curbed discretionary spending. By 2023, it started to face challenges in paying distributors.

Then, on the finish of 2024, Saks finalized its $2.7 billion acquisition of Neiman Marcus Group, forming a luxurious behemoth backed by the expertise of Salesforce and Amazon, which took stakes within the new firm as a part of the deal. The transfer was seen as an answer to the beleaguered retailer’s issues.

“It was touch-and-go up till the Neiman Marcus deal occurred,” Wassner mentioned. “Everybody thought that will resolve the money movement issues.”

As a substitute, based on Saks’ chapter submitting, the deal created extra issues, resulting in “speedy liquidity challenges” and a capital construction that grew to become “unsustainable.”

The deal was financed by $2.2 billion value of junk bonds — debt that carries excessive rates of interest — which S&P International warned traders about on the time. It left the corporate strapped for money, resulting in a spherical of layoffs to begin the 12 months (a number of extra would comply with).

“These extremely leveraged offers — and these mergers and acquisitions are virtually all the time extremely leveraged — begin out in a lower than splendidly enticing means,” Mark Cohen, the previous CEO of Sears Canada, instructed Enterprise Insider. “It is a home of playing cards from a monetary viewpoint.”

One of many first pink flags arose on Valentine’s Day, when distributors, who’re owed tons of of thousands and thousands of {dollars}, based on chapter paperwork, acquired an “I-love-you-not” from then-Saks International CEO Marc Metrick.

He instructed them that they’d have to attend. Saks would prioritize paying again the lenders who helped finance the Neiman Marcus acquisition. It could pay its vendor payments — in some circumstances, greater than a 12 months late — in installments stretched over 12 months that would not start till summer season.

Distributors, a few of whom had been burned by comparable communications previous to the 2019 chapter of the long-lasting division retailer Barney’s, had been left between a rock and a tough place.

One vendor, who mentioned he’s owed six figures, referred to as the scenario “agony.”

“We thought it was going to be a smoother transition and that this was going to be a worldwide luxurious masterpiece within the making,” the individual mentioned. “That simply didn’t occur.”

Manufacturers might withhold stock shipments — which might danger ruining relationships with a core buyer and put extra pressure on Saks’ stability sheet — or proceed enterprise as normal and hope for the very best.

Saks blames those that selected the previous for its issues.

“The lack to well timed pay distributors exacerbated the payables stability and additional strained relations with model companions,” the corporate’s chapter declaration says. “In flip, distributors had been much less keen to ship items to the Firm, leaving the Firm unable to construct an enough quantity of seasonal stock main into Spring of 2025.”

Those that did ship stock had been additional dissatisfied in July, when the cost schedule wasn’t met.

That month, Saks’ monetary vulnerability was made clear when a nine-figure curiosity cost prompted a debt restructuring. A majority of bondholders agreed to offer money in return for being moved up on the retailer’s cap desk. Mainly, which means that if (or when) Saks recordsdata for chapter, these bondholders get first dibs — possible earlier than any distributors.

“I’ll say the largest a part of it has been the psychological cruelty of this example, waking up, not figuring out what is going on to occur, attempting to maintain issues going,” the seller who spoke to Enterprise Insider mentioned.

A looming spring season

Within the fall, issues had dissolved to the purpose that a number of labels had been withholding stock.

S&P analysts wrote that Saks had a “less-than-adequate in-stock stock place.” In October, the corporate lowered its earnings steering for the 12 months, blaming stock challenges.

“You will ship to anyone you are going to receives a commission from,” Tim Hynes, the worldwide head of credit score analysis at Debtwire, instructed Enterprise Insider. “You’ll give Saks what’s left, you are not going to provide them the very best.”

Some manufacturers went even additional, taking direct purpose at Saks.

Skincare model Sunday Riley mentioned it threatened to sue if funds weren’t made, Retail Dive reported in August.

In October, Jovani Trend, the dressmaker made well-known by “Actual Housewives of New York” star Luann de Lesseps, filed a lawsuit towards Saks International — a uncommon step in a relationship-driven business. Jovani mentioned Saks owed $295,651 for merchandise it accepted this 12 months. (Saks has denied wrongdoing.) Different manufacturers have since adopted go well with.

By the tip of the 12 months, murmurs of a possible chapter submitting made headlines.

Solely a killer vacation season might save the shop — and that didn’t occur. Stock was nonetheless lagging, and there have been points integrating the Neiman Marcus and Saks platforms, which additional disrupted stock throughout any retailer’s most crucial season.

On the final day of 2025, The Wall Road Journal reported that Saks had missed a nine-figure curiosity cost.

“The Debtors confronted an ideal storm of liquidity challenges main into January,” a chapter submitting mentioned.

Within the background, the chapter proceedings had been already being sketched out. Saks had employed legal professionals and advisors to assist with a restructuring and was arranging a solution to push out its CEO.

The chapter will not be an in a single day repair — it should take a while for stock ranges to return.

Distributors and buyers alike are hoping for some kind of normalcy to return because the all-important spring season approaches.

“We’re sitting with $130 million in orders that our shoppers need us to approve,” Wassner mentioned. “I’d count on, inside two to 4 weeks, the cabinets will look very totally different.”

Kaja Whitehouse contributed reporting to this text.

Editor’s observe: This story was first printed on January 4, 2026, and has been up to date to replicate latest developments.