Time: 2024-07-04
Saks Fifth Avenue's owner, Hudson's Bay Co., has successfully closed a $2.65 billion acquisition of luxury retailer Neiman Marcus. The merging of Saks and Neiman will be aided by Amazon and Salesforce, with an announcement of the deal expected imminently. The transaction was approved by the boards of both Neiman Marcus and Hudson's Bay, and it will bring together 39 Saks Fifth Avenue stores and 36 Neiman Marcus stores under the new company, Saks Global. Amazon and Salesforce will also have minority stakes in the new entity, aiming to reduce costs and boost profitability in the face of a slowdown in luxury goods spending.
The acquisition of Neiman Marcus comes four years after the luxury retailer faced financial difficulties and filed for bankruptcy due to debt struggles exacerbated by the COVID-19 pandemic. In contrast, Saks has been grappling with liquidity issues and overdue bills. The two companies have engaged in on-and-off merger talks over the years, with Neiman previously rejecting a nearly $3 billion offer from Hudson's Bay in December.
The deal between Saks Fifth Avenue and Neiman Marcus is a significant move in the luxury retail sector, creating a powerhouse with approximately $10 billion in annual sales. Amazon will play a key role in the transaction by taking a minority stake in the new company, named Saks Global, and providing technological and logistical support. Salesforce will also be a minority shareholder, contributing expertise in artificial intelligence to the merged entity. The acquisition is seen as a strategic bet that the combined companies will be better positioned to navigate the challenges facing luxury retailers in a changing market landscape.
Luxury spending in the Americas has declined in recent years, with consumers exhibiting restraint in purchasing high-end goods. The merger of Saks and Neiman comes at a time when department stores are facing mounting pressure from sluggish sales and evolving consumer preferences. The consolidation of the two luxury retailers could strengthen their bargaining power with suppliers and streamline operations to drive efficiencies.
Following the completion of the deal, there are no immediate plans to close stores. Saks Fifth Avenue operates 39 stores and 95 discount stores, while Neiman Marcus has 36 department stores, two Bergdorf Goodman stores, and five Last Call discount stores. The merger of Saks and Neiman marks a pivotal moment in the luxury retail sector, showcasing a proactive response to the evolving dynamics of the industry.
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