Saks Closes 15 Stores in PE-Led Overhaul
Saks Global Enterprises, backed by L Catterton, will close 15 stores, including 12 Saks Fifth Avenue locations, in a major portfolio optimization. This "shrink to grow" strategy is a classic PE move to boost EBITDA margins and ROIC by shedding underperforming assets. The focus will now shift to higher-performing locations and e-commerce ahead of a potential exit or refinancing.
The recent wave of Saks Fifth Avenue and Neiman Marcus store closures is a direct consequence of Saks Global's Chapter 11 bankruptcy filing in January 2026. This move was largely necessitated by the substantial debt taken on during the $2.7 billion acquisition of Neiman Marcus in 2024, a deal architected by Richard Baker of Hudson's Bay Company. The bankruptcy declaration listed assets and liabilities between $1 billion and $10 billion, with between 10,001 and 25,000 creditors. Major luxury brands are among the unsecured creditors, with Chanel owed over $136 million and Gucci's parent company, Kering, owed $59 million. To navigate the restructuring, Saks Global has secured $1.75 billion in debtor-in-possession financing. The restructuring plan involves a significant reduction in the company's physical footprint to focus on profitable, high-potential locations. In addition to the 15 recently announced closures of 12 Saks Fifth Avenue and 3 Neiman Marcus stores, the company had previously slated 8 Saks Fifth Avenue and 1 Neiman Marcus for closure. This will leave a portfolio of 13 Saks Fifth Avenue and 32 Neiman Marcus locations. This overhaul also includes the closure of the majority of its off-price Saks Off 5th and Neiman Marcus Last Call stores, a move intended to sharpen the company's focus on the luxury market. The company has stated that the go-forward portfolio will consist of the best-performing locations in markets with the highest concentration of luxury customers. Interestingly, the private equity firm L Catterton, mentioned in the initial summary, does not appear to be a primary driver of this current overhaul based on available information. The key financial event precipitating the bankruptcy was the debt from the Neiman Marcus acquisition. A notable private equity involvement in Saks' recent history was a $500 million investment from Insight Partners in 2021, which valued the separated Saks e-commerce business at $2 billion. Leading the restructuring is the newly appointed CEO of Saks Global, Geoffroy van Raemdonck, who previously led Neiman Marcus through its own bankruptcy in 2020. The company has reported some positive momentum amidst the bankruptcy, with over 500 brands resuming shipment of merchandise, accounting for over 80% of expected inventory from February through April. The strategic separation of Saks' e-commerce business in 2021 highlights a broader trend and a key data point for analysis. While the digital arm showed strong initial growth, the overall enterprise is now navigating a complex restructuring. The success of this "shrink to grow" strategy will hinge on the performance of the remaining core luxury stores and the continued growth of the separate e-commerce entity. Foot traffic data from January provides a mixed signal, with Neiman Marcus seeing a 10.5% year-over-year decline in visits, while Saks Fifth Avenue posted a 1.2% increase, suggesting some resilience in the core brand even amidst the corporate turmoil. This data will be critical for modeling the potential success of the slimmed-down brick-and-mortar strategy.
