What if Saks Fifth Avenue also declared bankruptcy? The last American department store still standing (and perhaps not for long)

Before the great shopping streets, mega-boutiques, and global e-commerce, there were the department stores. Once in Europe cult places for fashion lovers of the last century, also because they were the places where one could find a summary of all the best global fashion. This was doubly true for the United States, where single-brand fashion boutiques generally arrived later than in Europe. For an entire era, places like Bloomingdale’s, Barney’s, Saks Fifth Avenue were not mere retail points, but true arbiters of taste, capable of legitimizing a brand, launching it, or relegating it to the margins—yet today, Saks itself, the department store par excellence, seems to be in a far from solid position.

At the end of December, the company behind the retail group missed a payment of interest exceeding 100 million dollars on bonds related to the 2.7 billion acquisition of Neiman Marcus, triggering bankruptcy proceedings and negotiations for emergency financing of 1 billion dollars. Debts have now risen to 4.7 billion, have been restructured, but declining sales and inflation have worsened a situation that then resulted in delayed payments and shipments. In recent days, CEO Marc Metrick has resigned, replaced by Richard Baker, while the company seeks to sell its assets to gain liquidity. This is the most severe crisis for a luxury department store since the post-pandemic period, and its effects could be disastrous.

The current situation at Saks Fifth Avenue

According to WWD, what is happening at Saks Fifth Avenue is not simply yet another chapter in the retail crisis of American luxury, but a potential systemic earthquake. The possibility that Saks Global could end up in bankruptcy would represent something very different from the failures seen in recent years within the department store industry, since Saks Global is today one of the last major consolidators still standing in the market, controlling around 70 full-line stores and a constellation that includes, besides Saks Fifth, huge luxury malls like Neiman Marcus, Bergdorf Goodman, and others.

An ecosystem that, until recently, was described as the most ambitious attempt to save and relaunch the American department store model through economies of scale and bargaining power. Today, however, Saks Global would be under financial strain, with heavy debt, unpaid suppliers, and the failure to make more than $100 million in interest payments — a signal that has set off alarm bells among investors and industry insiders.

What would happen if Saks really went bankrupt

If the hypothesis of a bankruptcy at Saks Global were to materialize, the consequences would go far beyond the closure of a few sales floors or an ordinary restructuring. As WWD points out, this would not be a “contained” failure, but an event capable of rippling through the entire American luxury supply chain.

The first impact would hit supplier brands. According to the experts cited by WWD, many labels count Saks Global as their main client, and in some cases as the only one able to absorb significant volumes of product. In a Chapter 11 scenario (a formal bankruptcy filing), suppliers would risk recovering only a small fraction of what they are owed, between 5 and 10 percent. For several brands, that percentage would amount to a death sentence, since without those payments the very sustainability of their business would be called into question.

Further complicating the situation is a structural problem. Even for brands operating on consignment, or with goods already produced but not yet shipped, there are few alternatives. WWD notes that the department store system cannot easily be replaced in the short term; Nordstrom and Bloomingdale’s could theoretically absorb part of that demand, but they operate with buying calendars already locked in and a positioning that, in many ways, remains tied to the same model that is now showing its cracks. The result would be an excess of inventory with no real home, destined to reach the market too late or be heavily devalued.

Is there a future for department stores?

Beyond the apparent crisis at Saks, it is hard not to wonder whether there is still a future for department stores. For years now, luxury has been going through a phase of structural slowdown, with a growing distance between brands and the aspirational audience. At the same time, VICs (very important clients) — the ones who truly drive revenues — are increasingly shifting their purchasing habits toward flagship stores and direct channels.

For this very reason, the role of the department store as an intermediary loses centrality and risks being reduced to a logistical platform, often squeezed between ever-thinner margins and increasingly autonomous brands. It is no coincidence that La Rinascente has repositioned itself as a destination for ultra high-end tourism - just look at the average customer at its Duomo location in Milan. A strategy that works economically, but that has gradually distanced the department store from its original role as a cultural catalyst for the country’s fashion scene.

And if maisons speak directly to their clients, invest in their own spaces, and cultivate one-to-one relationships, the department store struggles to carve out a role that is anything but ephemeral. Cases like Saks show just how fragile this balance has become: when cultural value fades, economic value quickly begins to suffer as well.

Takeaways

1) A potential Saks Global bankruptcy would mark a breaking point for American luxury retail, involving one of the last major department store groups still standing and triggering ripple effects across brands, suppliers, and financial partners.

2) Saks now needs brands more than brands need Saks, weakening its bargaining power and exposing the limits of a debt-driven, scale-based retail model.

3) A Chapter 11 filing would put dozens of brands at risk, especially those relying on Saks as a primary sales channel, with minimal recovery expected and few short-term alternatives for reallocating inventory.