The luxury retail giant Saks Global has sought bankruptcy protection, a significant retail downturn since the pandemic’s onset, as announced late Tuesday.

This decision follows a little over a year after a prominent merger aimed to consolidate Saks Fifth Avenue, Bergdorf Goodman, and Neiman Marcus into a formidable luxury entity.

“Bankruptcy was always a probable outcome for Saks Global following the debt-heavy acquisition of Neiman Marcus. The real shocker is how quickly it happened, barely a year post-acquisition,” remarked Neil Saunders, a retail analyst at GlobalData, in an interview with the Daily Mail.

This filing has cast doubt on the fate of these iconic American fashion names. However, Saks reassured on Wednesday that its stores would continue operations, having secured $1.75 billion in funding and appointed a new CEO.

Back in November, Saks announced plans to close nine out of its approximate 100 Saks Off Fifth outlets in January. Nonetheless, concerns are mounting that the ultimate count of store closures could be significantly higher.

Retailers often use Chapter 11 bankruptcy to exit expensive leases, and Saks is expected to close around half of its Off Fifth locations, along with several of its 41 main Saks stores and some of its 36 Neiman Marcus locations.

In a typical Chapter 11 process, store closures usually begin around 30 days after the filing.

‘Bankruptcy will give Saks Global some breathing space and a chance to restructure,’ Saunders added.

Luxury department store conglomerate Saks Global filed for bankruptcy protection late Tuesday, marking one of the largest retail failures since the pandemic (pictured: models pose in holiday dresses from Saks Fifth Avenue)

Christmas lights glow outside the flagship Saks Fifth Avenue store in New York, a holiday tradition that has drawn crowds for decades. 

‘However, it is vital that debt levels are brought down and that the company has room to make the investments needed to make up for more than a year of neglect. Relations with suppliers will also have to be reset. All of this will be a tall order that will take some years to correct.’ 

Shoppers are eager to know whether the bankruptcy filing will translate into deep discounts on luxury goods, and if the store’s winter sale — offering reductions of up to 85 percent — is any indication, steep bargains may be on the horizon. 

Long favored by wealthy and high-profile shoppers, Saks never fully rebounded from the COVID-19 pandemic as online competition intensified and luxury brands increasingly shifted sales to their own stores. 

Last year, the company struggled to pay suppliers, prompting some vendors to withhold inventory.

Former Neiman Marcus chief executive Geoffroy van Raemdonck will succeed Richard Baker, the architect of the acquisition strategy that left Saks Global heavily indebted. 

Baker, the company’s executive chairman, had assumed the CEO role only at the beginning of the year.

Court filings show Saks Global’s assets and liabilities are each estimated at between $1 billion and $10 billion. 

The original Saks Fifth Avenue store — founded in 1867 by retail pioneer Andrew Saks and known for its exclusive brands such as Chanel, Cucinelli, and Burberry, as well as its holiday light displays—has long been a fixture of American luxury retail.

Shoppers are eager to know whether the bankruptcy filing will translate into deep discounts on luxury goods

Marc Metrick, the retailer’s CEO, is reportedly plotting his exit from the cash-strained chain

The bankruptcy process is intended to give the company time to negotiate a debt restructuring with creditors or seek a buyer. Without a deal, Saks could be forced to close. In its filing, the company said weak demand was not the issue.

‘The company’s challenges are tied to inventory availability and vendor confidence, not underlying demand for luxury goods,’ Saks said.

Its flagship on Fifth Avenue in New York became a tourist attraction in its own right, famous for its elaborate holiday windows and front-row access to the world’s biggest designers. 

But in recent years, Saks has struggled to adapt to a luxury market transformed by internet shopping and brand-owned stores.

The crisis marks a dramatic turn for a retailer that only last year pitched a bold comeback plan built around its $2.7billion takeover of rival Neiman Marcus. But the deal hasn’t paid off for either retailer. 

Since the merger, Saks closed a store in San Francisco and Neiman Marcus shuttered a flagship in Dallas.

Saks took on billions in debt to fund the deal, betting that combining two struggling luxury chains would turn their retail fortunes around.

Meanwhile, Saks Off Fifth, its discount chain rival to TK Maxx, said in November it planned to close nine stores by early 2026 as part of cost-cutting efforts.