Another big split for Saks — this time for off-price business Saks Off 5th is following the lead of its full-price namesake.
Parent company Hudson’s Bay Co. is partnering with venture capital firm investor Insight Partners to establish Saks Off 5th’s e-commerce business as a standalone entity. Insight has made a $200 million equity investment in Saks Off 5th’s online business, valuing it at approximately $1 billion.
The Saks Off 5th store fleet, made up of 105 locations across the United States and Canada, will be a separate operation and be referenced as O5. It will remain wholly owned by HBC.
Earlier this year, HBc and Insight teamed up to establish Saks’ full-price e-commerce business as a standalone entity to be known as Saks. HBC retained full ownership of the retailer’s 40-store fleet, now operating separately as a company called SFA.
“With a unique market position and on the heels of explosive growth, we are excited to establish Saks Off 5th as the preeminent digitally native luxury off-price retailer,” stated Richard Baker, HBC’s governor, executive chairman and CEO. “As a true off-price business with a superior merchandise offering, Saks Off 5th has a significant opportunity to capture additional market share by further expanding its digital capabilities.”
Paige Thomas, who joined Saks Off 5th as president and CEO in early 2020, has been named president and CEO of the independent e-commerce business. She will also serve as a member of the board. Prior to Saks, Thomas spent nearly eight years at Nordstrom. Before that, she was with Kohl’s.
“Under Paige’s leadership, Saks Off 5th has a clear runway ahead,” said Baker. “She took the helm just a month before the pandemic and has successfully led the business through a most challenging period, while driving ecommerce growth and enhancing product mix and brand availability.”
Rob Brooks, who previously served as chief customer officer for Saks Off 5th, was tapped as president of O5, which will operate the brick-and-mortar stores business similar to a franchise model.
Marketing and merchandising for both businesses will be led by Saks Off 5th to deliver a cohesive experience for shoppers. Returns, exchanges and SaksFirst credit cards will continue to be accepted both online and in stores.
Insight Partners is joining other significant investors in HBC and Saks Off 5th, including Rhône and its affiliates, a leading investor in HBC since 2017.
“This is another major step in our partnership with Richard Baker at HBC, and Insight Partners,” said Franz-Ferdinand Buerstedde, managing director, Rhône and HBC board member. “Paige Thomas and her team at Saks Off 5th have done an incredible job of reimagining and transforming the business into the premier off-price destination for designer fashion, both through its thriving digital platform and its retail stores. The changes announced today will give the business the capital, additional expertise and resources to drive continued growth.”