Saks Fifth Avenue Owner Seeks Bailout Amid CEO Departure
The owners of Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman, are trying to secure over $1 billion in bailout funding from both new and existing investors, according to recent reports. This comes at a time when the company has announced the resignation of its CEO.
The luxury retailer is in urgent need of cash to manage its considerable debt obligations, which include a whopping $100 million in interest payments to bondholders that are due shortly. Additionally, Saks owes millions to vendors, many of whom have been waiting for full payments for more than a year.
Sources familiar with the situation indicate that Saks is exploring options with investors for a substantial cash influx to prevent a potential bankruptcy filing. If discussions don’t go as planned, the capital may need to be structured as debtor financing through a Chapter 11 reorganization.
One official noted, “Talks are likely to conclude within a few weeks,” but the outcome remains uncertain.
Concerns about bankruptcy intensified this week after the retailer missed an interest payment to bondholders. This payment was related to a hefty $2.7 billion loan taken out last year to facilitate the acquisition of Neiman Marcus.
However, it appears that Saks Global has gained a 30-day grace period for those interest payments, as reported by RetailStat, which specializes in retail credit data.
In more management news, CEO Mark Metric announced on Friday that he is stepping down after a decade in charge.
Richard Baker, the company’s executive chairman who previously served as CEO before the Neiman Marcus acquisition, will take over.
Metric, who has been with Saks for nearly 30 years, expressed pride in his achievements, notably in building a strong team and enhancing Saks.com into a leading luxury e-commerce site.
The retailer’s sales have recently dropped 13% in the last quarter, which concluded on August 2.
In an effort to raise capital, the company has started leveraging its extensive real estate holdings. Earlier this year, Saks closed its San Francisco location and has now sold the land under its Neiman Marcus store in Beverly Hills, although the store will continue to operate under a long-term lease.
Back in June, Saks Global announced the successful raising of $600 million in new capital from bondholders and is considering selling a minority stake in Bergdorf Goodman to generate further funds.
It’s worth noting that the merger with Neiman Marcus coincided with a decline in demand for luxury goods.
This year, Saks has also experienced several layoffs as part of its cost-cutting strategies.
Baker acknowledged Metric’s contributions, stating, “Mark has been a valued leader at Saks… We thank him for his leadership and dedication.” He wished him all the best in his future endeavors.
