Fashion brands and jewelers linked to Saks Global are halting shipments to the retailer amid concerns over unpaid debts as the company navigates bankruptcy proceedings. Saks Global, which operates Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman, filed for bankruptcy on January 14, with Amazon claiming $475 million as the largest creditor. Amazon opposes Saks’ proposal for a $1.75 billion debtor-in-possession (DIP) loan, asserting that it is not adequately backed and suggesting the sale of Saks’ flagship store to settle debts.
The ongoing legal battle has left many vendors cautious. The top 30 unsecured claims against Saks are nearly $700 million, raising fears that the situation could lead to liquidation—a fate seen in other high-profile bankruptcies. Notably, Saks’ new CEO, Geoffroy van Raemdonck, acknowledged that a decline in merchandise availability contributed to the retailer’s struggles. He emphasized rebuilding trust with brands as a key strategy moving forward.
As vendors await clarity on their payments, many are opting to ship merchandise to competitors like Bloomingdales, which has reported an uptick in sales and new designer partnerships. Some suppliers demand “critical vendor” status to secure repayment for pre-bankruptcy debts. Jewelry brands, including those from New York’s Diamond District, have faced similar challenges, with stories of unpaid bills and returned merchandise becoming common.
Despite the turmoil, some businesses continue to send products to Saks in hopes of maintaining their relationship, though many are apprehensive about the possibility of undelivered payments.
Why this story matters
- The potential fallout of Saks Global’s bankruptcy could reshape the luxury retail landscape and impact numerous stakeholders.
Key takeaway
- The uncertainty surrounding Saks Global’s ability to pay its vendors is leading to a significant reduction in merchandise shipments to its stores.
Opposing viewpoint
- While some vendors are withdrawing support, others continue shipping to support business relations, indicating a divide in attitudes towards Saks’ future.
