Is the Saks Acquisition of Neiman Marcus a Good Move?

Saks Fifth Avenue’s parent company, HBC, has announced the acquisition of Neiman Marcus for $2.65 billion, which, once the transaction is finalized, will establish a new luxury retail powerhouse named Saks Global.

Once direct competitors and heated rivals, the two brands are now planning to structure a single retail fashion entity while keeping all of the included brands intact and operating under the same names. The mainstay brands will be:

• Bergdorf Goodman
• Neiman Marcus
• Saks Fifth Avenue
• Saks OFF 5TH

Marc Metrick, currently CEO of Saks.com, will become CEO of Saks Global, where he will lead its retail and consumer businesses and drive strategies to enhance the luxury shopping experience. In the announcement’s press release, Metrick said, “We have respect and admiration for NMG and the contributions its teams have made in the company’s evolution. Together, with our ongoing focus on innovation, we are primed to drive growth for our brand partners and create career development opportunities for the incredible talent across Saks Global.”

Geoffroy van Raemdonck, CEO of Neiman Marcus Group (NMG), highlighted the strategic alignment and complementary capabilities between Saks and NMG. He expressed confidence that this collaboration, along with a new long-term capital structure, will enhance customer value and ensure the success of iconic brands like Neiman Marcus and Bergdorf Goodman.

The main goals of this acquisition are to:

• Provide greater merchandise selection and accessibility through online and fulfillment
• Increase personalization with technology, including first-party data combined with AI
• Support sales associates to maintain customer service along with career development
• Bolster fashion brands, both new and established, so they can better reach luxury consumers

“We’re thrilled to take this step in bringing together these iconic luxury names, Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman. For years, many in the industry have anticipated this transaction and the benefits it would drive for customers, partners and employees. This is an exciting time in luxury retail, with technological advancements creating new opportunities to redefine the customer experience, and we look forward to unlocking significant value for our customers, brand partners and employees.”

Richard Baker, HBC Executive Chairman and CEO, via Business Wire

CNN reported that the two companies have been planning this merger for multiple years now. One of the most important factors in completing this acquisition is for the retailers to be able to better price products from the luxury brands they carry and sell.

The deal also includes Amazon’s involvement. It plans to work with Saks Global to innovate in customer experience and logistics, reflecting its interest in expanding into luxury retail. The e-commerce retailer has invested in the deal and positions itself to become more involved in both the space of physical stores and the luxury retail market. Amazon is also expected to be responsible for handling the logistics of the e-commerce side of sales for the newly announced Saks Global.

This acquisition will likely face challenges along the way. Neiman Marcus filed for Chapter 11 bankruptcy in 2020 and has only recently begun to recover. And with any acquisition, there are concerns about job losses due to restructuring and layoffs. Additionally, there is no guarantee of how the completed merger will fare and whether it will positively or negatively affect all the brands involved.

The finalization of the deal is still pending and requires approval by the Federal Trade Commission. It is possible the acquisition will face regulatory scrutiny if the FTC believes the combined entity would harm competition, similar to how it challenged the merger of Tapestry and Capri in April.