Saks Fifth Avenue buys Neiman Marcus with help from Amazon

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Clothing is offered for sale at the Neiman Marcus department store.

New York

Saks Fifth Avenue and Neiman Marcus are merging to create a luxury department store empire. And Amazon wants to help.

Saks owner HBC announced a deal Thursday to acquire Neiman Marcus for $2.65 billion, creating a luxury giant called Saks Global that, in addition to its two namesake department stores, also owns the Saks Off 5th discount store and the upscale Bergdorf Goodman.

“We are excited to take this step and bring together these iconic luxury names, Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman,” HBC CEO Richard Baker said in a press release.

The two companies have been linked to merger talks for years, and the deal gives them more leverage to negotiate lower costs with luxury brands. Saks has 39 stores, while Neiman Marcus, which filed for bankruptcy in 2020, has 36 stores. Neiman Marcus also owns Bergdorf Goodman.

Several leadership changes were also announced. Current CEO Marc Metrick will become CEO of Saks Global. Current HBC Properties and Investments CEO Ian Putnam will become CEO of Saks Global’s real estate and investments business. Both will report to Baker, who will become executive chairman of Saks Global.

The merger means that HBC’s Canadian operations, which include Hudson’s Bay department stores and $2 billion in real estate across the country, will operate separately from Saks Global. The unit “will be well-positioned to support future growth while continuing to serve its loyal Canadian base,” the release said.

The chains are responding to changes in the sector, such as the decline of department stores and the growing power of luxury brands.

Brands like Louis Vuitton parent LVMH are growing larger and shifting their distribution strategy toward direct-to-consumer sales, away from department stores. The planned merger of Saks and Neiman Marcus is attempting to regain some control. It also comes on the heels of Coach parent Tapestry’s proposal to buy Capri, owner of Michael Kors.

“As a larger entity, the negotiating position with the brands will be somewhat better, but even a combined chain would not be able to match the size and power of the global luxury conglomerates, who would still hold the majority of the cards,” Neil Saunders, analyst at GlobalData Retail, said in a note to clients on Wednesday.

However, Saks’ deal could come under regulatory scrutiny. The Federal Trade Commission filed a lawsuit seeking to block Tapestry’s merger with Capri, saying it would harm competition.

“The proposed merger threatens to deprive millions of American consumers of the benefits of direct competition between Tapestry and Capri, including competition on price, discounts and promotions, innovation, design, marketing and advertising,” the FTC said.

Amazon is also investing in the merger and will work with Saks Global to “innovate on behalf of customers and brand partners following the closing of the transaction,” the press release said.

Amazon has tried to grow in physical retail. In 2022, it opened Amazon Style clothing stores in Glendale, California, and Columbus, Ohio, but closed them last year.

Saunders added that Amazon’s stake “makes sense as the company has ambitions to play a bigger role in the luxury sector and this would give it a foothold.”

“The real win here, however, would be Amazon’s ability to streamline its logistics and e-commerce, which would give the new entity an advantage in a market where remote shopping has become more important to shoppers — particularly younger shoppers, whom both chains need to attract more,” he said.

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