The increasing likelihood of a Saks Global bankruptcy any day now is sending shock waves through fashion.
Among the hardest hit would likely be small independent designers who don’t use a factor to guarantee payment, but brands of all sizes would feel the pain given the importance of both Saks and Neiman Marcus to the sales of fashion and luxury brands. The group operates 70 full-line stores across both banners.
Ronny Kobo, an independent contemporary designer, has been growing her business with Saks for the past four years and has developed a strong relationship with the retailer’s team.
“We invested deeply financially and operationally with the intention to build a long-term, profitable partnership,” said Kobo, whose brand is prominently housed in the flagship’s fifth floor contemporary department. “We put substantial time, resources and energy into growing the business at Saks, and we were doing 400 units a week in sales. It was like we were just starting to rock ‘n’ roll.”
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Kobo had been on the company’s 90-day payment plan, but the payments stopped coming in December. Now she is owed a lot of money, although she declined to specify how much.
“I’ve invested in this relationship. I’ve been a really good partner. But now I’m at a place with my brand that if I don’t get paid from Saks, I don’t know how I’m going to support this month’s overhead,” she said.
Kobo also has a collaborative collection with Sony Music that’s supposed to be delivered to Saks this spring. She said it’s extremely disappointing that her brand has performed very well and she has publicly supported Saks, but “it’s not being met with a corresponding priority.” Without the payment for her merchandise, she can’t afford a pop-up store or advertising.
“I thought, ‘I’m investing here with the potential to have one of the leading contemporary brands in the next two years in contemporary, and I looked at my relationships with the people there,” Kobo said. “And I have very strong relationships. Today, having a business requires an ethical and moral culture, and I feel that the smaller businesses need to be taken care of before any filings. Smaller businesses who shipped Saks took a risk. And I think that the smaller businesses should be protected out of good, moral culture. What does a company like [Saks] stand for? It does not stand to put smaller businesses out of business.”
Kobo sells Saks, Neiman Marcus and Bergdorf Goodman and said she is sitting with $2.5 million in orders to Saks that she doesn’t know whether to cancel or to ship. She doesn’t want to cancel the orders because she made these collections in collaboration with their team. “We believed in this. Our collaboration with Sony right now was supposed to be huge,” she said.
Kobo thought Marc Metrick (who exited as chief executive officer last week) “was an excellent CEO, and I really trusted Marc Metrick ethically and culturally, and I thought he was a wonderful leader and was sad to see him go.”
Factor Hilldun Corp. advised its clients on Tuesday to not ship goods to Saks Global, but Kobo said she still might ship spring. “Maybe this is an opportunity for the smaller businesses,” she said.
But the picture could change very quickly, as some observers see a bankruptcy filing as just days away. While that would make it harder to get paid for past orders, it could stabilize the situation going forward.
Andrew Rosen, fashion entrepreneur and investor in brands like Alice + Olivia, Veronica Beard, TWP and Rag & Bone, said: “I think it’s unfortunate that it’s come to this, but actually if they do go bankrupt, it allows them to really clean up their business and start fresh. The truth is Saks and Neiman’s are critical to our business. What they do, no one else does. They concentrate on their luxury customer. They have the capability of doing it well. They just have to get out from under all this financial stress, which a bankruptcy would do. I think then it’s off to the races, so to speak.”
Rosen said that most of his brands do a big business with Saks, Neiman’s and Bergdorf’s.
“I’ve been a big supporter of them, and yes, we have exposure,” he said. “Hopefully something will happen and it’s going to get sorted out quickly, and we can move forward and get back to building businesses again. It’s been a distraction over the past 12 months. All of us are going to lose a little something in this, but hopefully it will set the company up for a lot of success.”
In Rosen’s opinion, department store retailing needs to get smaller. He feels it makes sense to close some stores since a lot of Saks and Neiman’s stores compete against each other.
“The retail landscape has changed so much. I think with so many brands opening their own stores, the role of the department store, which I still think is critical, needs to be reimagined and resized, and I think that’s what will happen here,” he said.
While his brands aren’t factored, Rosen said: “Everyone is going to be affected in the event that they do go bankrupt in the short run. Some worse than others. It’s what happened when Neiman’s went bankrupt and certainly was a different situation with Barneys since they never came out of bankruptcy,” although the Barneys New York name lives on and is owned by Authentic Brands Group. (Ironically it was licensed to Saks to open Barneys department in Saks stores.)
“A bankruptcy gives them an opportunity to reimagine their own business,” Rosen said. “I think Richard [Baker, executive chairman and CEO of Saks Global] is a smart guy, and it gives him an opportunity to have a business that’s set up for success.”
Rosen said he’s been shipping Saks because he believes “that, if it does bankrupt, it will come out of bankruptcy and it’s going to be viable.” He said they will get more money from selling the goods to Saks than if they had to sell them to an off-pricer.
“If you do ship within 20 days of a bankruptcy you get 100 percent of your money,” said Rosen. Not all of Rosen’s brands are shipping, “but we’re selectively shipping going forward.” He said if a bankruptcy is going to happen, it will happen soon. “They need to set themselves up for spring shipments. If it is going to happen, it’s going to happen quickly,” he predicted.
“This is not comfortable for anyone. There is a bit of the unknown, but I believe in the institution of Saks and Neiman’s as a viable entity going forward. I believe in the fact that this thing is going to be worked out, as many of them do, and they’re going to be right back in business,” said Rosen.
“I don’t see the other option,” he added. “They’ve got great real estate, they have a good business, they messed it up a little bit.”
While Saks Global has been looking to sell off at least a stake in Bergdorf’s and has sold off some real estate, he said the company will have a lot of options if it does file. “It doesn’t require a sale now once they go bankrupt. Now it’s a whole different ballgame because all their debt gets restructured. It’s a much more viable kind of entity,” said Rosen.
Susan Sokol, cofounder of High Alchemy, a luxury multibrand showroom, said: “We opened nine years ago and we have consistently supported young emerging designers from Day One from all over the globe. Almost half of our 20 designers have been impacted by un-kept payment promises [from Saks Global]. It’s been extremely stressful for smaller, emerging designers.”
She said most of her brands are not factored.
“At the end of the day, we all want Saks Global to come out of this,” said Sokol. “We have incredible relationships with many on the team.”
She said some of her designers were still getting paid monthly for fall ’24 and resort ’25 merchandise. They were on a payment plan and were paid in monthly installments from August through December. “I’m not sure what will happen now,” she said.
Their other designers, who were on the 90-day terms, are owed money from pre-fall ’25, fall ’25 and resort ’26. And spring ’26 is being held; in some cases merchandise is produced, and in other cases the raw materials have been purchased.
Sokol said that Saks represents about 20 percent of the showroom’s revenue. “We have always been mindful to balance our sales with other retailers,” she said.
She noted that stores such as Neiman Marcus and Saks need the younger, emerging designers to differentiate their assortment. “Neiman Marcus and Bergdorf Goodman have always been about supporting young designers,” she said.
Jonny Saven, CEO of L’Agence, the Los Angeles contemporary firm, said, “All I can say is it’s trying times for all involved now, and we will continue to support them as they come through this patch, which they will.”
