For the last several months Saks Global has vexed customers, suppliers and the city of Dallas, if not the whole state of Texas. Saks executives appear to be at war with civic leaders in Dallas who scrambled to solve a lease issue they had blamed for the closure of the beloved Neiman Marcus flagship; with vendors who haven't been paid, yet risk losing their standing if they refuse to ship inventory; and with customers who complain of dismal service.
In doing so the company, formed at the end of last year when Saks parent HBC acquired Neiman Marcus and Bergdorf Goodman for $2.7 billion, is flirting with handing over market share to its rivals.
“As Saks digests its Neiman Marcus acquisition, which closed in December, it could continue losing sales to peers including Bloomingdale's and Nordstrom, particularly as some vendors still wait for payments on shipments made since 2023, with plans to pay the overdue balances over 12 months,” Bloomberg Intelligence Senior Industry Analyst Mary Ross Gilbert said in a Feb. 24 research note.
Of those two department stores, Nordstrom is especially primed to pick up customers and sales from Saks Global retailers, say analysts, including Gilbert and Thomaï Serdari, a luxury branding strategist who teaches at New York University’s Stern School of Business.
This is partly due to its size: As of year’s end, Nordstrom runs 92 full-line department stores and 277 off-price Rack stores, while Macy’s Inc. runs 32 full-line Bloomingdale’s department stores, 23 Bloomingdale’s outlets and four Bloomie’s small-format stores.
However, Nordstrom’s advantages are not only about store count, but also strength in merchandising and customer service, Gilbert and Serdari said. Its impending escape from the glare of Wall Street, following a $6.25 billion take-private deal forged by members of the founding family and Mexican department store conglomerate El Puerto de Liverpool, will likely free the company to innovate further.
“Management now seems to be making investments and correcting past mistakes in a way that they weren’t last year,” GlobalData Managing Director Neil Saunders said in emailed comments. “The focus on deepening customer understanding and styling is also evident in the recent appointment of Catherine Bloom. The privatization of the business may have acted as a catalyst for all this, but it bodes well as Nordstrom embarks on the next stage of its journey under new ownership.”
Relationship status
In fact, Nordstrom’s capacity to take on Saks Global is neatly reflected in the hire of former Neiman Marcus personal stylist Bloom for a new role, director of luxury styling, Gilbert and Serdari agree.
“The stylists are really key,” Gilbert said by video conference. “If you look at the metrics that Neiman Marcus has disclosed, they’ve said their top 2% of customers comprise 40% of the business. That's huge. Well, what percent of that 40% just went away with Bloom? And she's known to cater to a lot of celebrities and high-end clients.”
“So Bloom is now at Nordstrom, and that's a big thing,” she said.
Nordstrom is taking advantage of Bloom’s roots in Los Angeles — she was previously based at Neiman Marcus’s store in Beverly Hills — and also experimenting with a storefront model it could replicate in other cities, according to Serdari. Its Melrose Place Local store will be a dedicated storefront dubbed Catherine Bloom for Nordstrom, and she will participate in buying trips.
As Nordstrom woos Neiman Marcus’ best customers, Saks Fifth Avenue, and now Saks Global, is irritating suppliers and customers alike.
Many of Saks’ vendor relationships have frayed to the point of damaging its inventory flow, a monthslong problem that has continued into this year. Perhaps most galling to loyal Saks Fifth Avenue customers are breakdowns in customer service, especially extremely long refund delays or even rejected returns of unused items. Some complaints have gone viral on social media.
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“The customer comes first, you do everything around the customer. Here, they’re not treating their vendor partners right, or their customer,” Gilbert said. “And then you've got Nordstrom. Nordstrom is known for service. They treat their vendors right, and they treat their customers right.”
Saks could come back from this tarnishing of what had been a top-notch luxury brand, but that may require a change in leadership, Gilbert said.
“What concerns me the most is that Marc Metrick is running Saks Global, and he was the guy at Saks,” she said. “I just think that there's something that has to happen at the CEO seat, because that kind of philosophy of not treating the customers right — that's the fundamentals.”
By the numbers
Data from Saks Global retailers, which have all been privately held since before the merger, is not as extensive as the public-market earnings reports from Nordstrom and Bloomingdale’s. Deterioration at Saks Global is nevertheless evident, according to consumer-transaction data from Bloomberg Second Measure.
Year-on-year sales decreases at the Saks banners accelerated in 2024, according to Bloomberg Second Measure’s data. The decline at Saks Off-5th was more than double that of the full-line business, while Neiman's sales were “more resilient,” per that research.
In her client note, Gilbert speculated that Saks’ weakness could be related to parent HBC’s financial woes, plus executives' focus on the Neiman Marcus acquisition.
Nordstrom and Bloomingdale’s, by contrast, had good years, at least for department stores.
In 2024, Nordstrom net sales rose 2.4% year over year to over $14 billion, with net earnings more than doubling to $294 million, and it ended the year with $1.8 billion in available liquidity, including $1 billion in cash. At Bloomingdale’s 2024 net sales rose 1%, with comps, including licensed and marketplace sales, up 2.5%.
Saks Global is also mired in debt, having taken on an extra $1.8 billion asset-based lending facility and $2.2 billion in senior secured notes to fund its purchase of Neiman Marcus, and suffers “a persistent free operating cash flow deficit,” according to S&P Global Ratings analysts. Canadian department store Hudson's Bay Co., also owned by HBC but run as a separate company, filed for the equivalent of bankruptcy protection on Friday, saying it is “facing an urgent liquidity crisis,” unable to pay suppliers and “unable to fund payroll within a matter of days.” While that filing doesn't affect Saks Global, Hudson’s Bay Co. does run Saks Fifth Avenue and Saks Off 5th in Canada.
Nordstrom’s pending bid to go private, closing some time this year, will require little new debt, according to Fitch Ratings Senior Director David Silverman.
Serdari believes that HBC may have wanted to boost revenue by expanding via acquisition, but said that is an outdated tactic in the post-pandemic 21st century.
“I think that this deal probably started on an Excel sheet. I don't think they got together to define what these two institutions have been good at, and say ‘Let's bring our capabilities together,’” she said. “I think it was ‘Okay, here's a business. Department stores are coming back. Let's create the biggest department store.’ But growth is not scale any longer. Department stores need to grow, of course, they are businesses. But there are other ways. You grow by being different, being special and being novel — and being all the things that you want to put under your name.”
A tale of two cities
From their offices in New York City, Saks Global executives are waging a war with the city of Dallas, over the March 31 closure of the nearly 120-year-old Neiman Marcus flagship.
The kerfuffle in Dallas has been mystifying. Last month, the company announced plans to shutter the iconic downtown Dallas store, blaming an unresolved lease dispute with the owner of a small parcel of land beneath the store’s escalators. Yet even after the city took possession of the deed in early March and prepared to allow the store to lease the land at no charge — following a fast-moving 11th-hour negotiation between civic leaders and the landlord that resolved the issue — Saks doubled down on the closure.
Saks Global accused the consortium of city leaders of “false statements,” “inaccurate claims,” and “using the press to pressure us into changing our strategy in Dallas.” Consortium members entreated executives to go through with a meeting that both sides seemed to agree to, offering to host in Dallas or fly to New York. On Friday the Dallas Morning News editorial board called the shifting rationale a “load of bull” and said “Saks Global spun a story that collapsed in a bad business pile.”
Back in New York, Saks Fifth Avenue’s flagship has arguably lost its luster despite a $250 million renovation completed in 2019. Its location on Fifth Avenue, once a luxury mecca, is now dominated by tourists, which mostly works against them, according to Serdari. Nordstrom, though, has made a “brand-new start of it” after its long-awaited New York debut was interrupted by the pandemic, she said by video conference.
“As a New Yorker, I find no reason to go to Saks. They had some intense programming starting two years ago, spa sessions and space activations, but it didn't go anywhere. No one is talking about it any longer,” Serdari said. “Nordstrom had a really rough beginning, because it opened during the pandemic, and then after the pandemic, we were all a little rusty. But now they're really delivering on that business model with the store on [West 57th Street] — they have tons of activations — and Nordstrom Local. In terms of their New York presence, they have really made it. They're very solidly embedded in the culture of New York.”
