Saks Global reorganization plan gets court OK; debt slashed
Saks Global will exit bankruptcy with a leaner store footprint, a renewed focus on luxury retail and “significantly” less debt.
The luxury retailer’s reorganization plan has been approved by the U.S. Bankruptcy Court for the Southern District of Texas. Confirmation of the plan, which includes the reduction of nearly 75% of the company’s debt to approximately $1.2 billion, paves the way for Saks Global to exit Chapter 11 in the coming weeks with a much stronger financial foundation.
"With significantly reduced debt on the company's balance sheet at emergence and having already achieved substantial cost savings through the optimization of our footprint, operations and organization, our business is well positioned for future success,” said CFO Brandy Richardson.
Saks Global, whose portfolio includes Neiman Marcus, Saks Fifth Avenue and Bergdorf Goodman, will receive $500 million in fresh financing when it exits bankruptcy. Looking further out, the retailer said it expects to generate $9 billion in total gross merchandise value and double-digit adjusted EBITDA by fiscal year 2030.
Since filing for bankruptcy in January, Saks Global has made a number fo changes. These include focusing on its full-price luxury business by closing nearly the entire off-price Saks Off5th store fleet.
It also launched a “planned optimization" across its store portfolio that has left it with 15 Saks Fifth Avenue stores and 33 Neiman Marcus locations, as well as its two Bergdorf Goodman locations. (The company has also noted that it "is always evaluating its store footprint and may find it necessary to close a store in the future.")
Saks Global also renegotiated its relationship with its strategic luxury suppliers during bankruptcy proceedings.
In a release, Saks Global said its actions are translating into “sustained momentum across numerous areas of the business,” with “go-forward” store sales continuing to show steady improvement, reflecting stronger customer engagement as a result of increased inventory.
"Securing approval of our plan is an incredible achievement for Saks Global, and the broad-based support we have received from our capital partners, brand partners and other key stakeholders reflects confidence in our future," said Geoffroy van Raemdonck, who was named CEO after the company filed for bankruptcy. "With our capital partners' commitment and the dedication of our talented team, we are on track to emerge as a stronger, more focused company, poised for profitable and sustainable growth. I firmly believe in Saks Global's enduring role as a leader in the luxury retail ecosystem, delivering exceptional experiences for customers and serving as the premier gateway to the U.S. luxury consumer for our brand partners. I am confident we are well positioned to define the future of luxury retail."
