Saks Fifth Avenue is officially bankrupt And now the financial fallout will affect many brands and designers.

Before the great shopping streets, the mega-boutiques, and global e-commerce platforms, there were the department stores. Once in Europe places of worship 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 monobrand fashion boutiques arrived typically later than in Europe. For an entire era, places like Bloomingdale’s, Barney’s, Saks Fifth Avenue were not simple points of sale, but true arbiters of taste, capable of legitimizing a brand, launching it, or relegating it to the margins—yet today, precisely Saks has officially declared bankruptcy after months of difficulties.

But what exactly happened?

The Collapse of Saks Fifth Avenue

At the center of the crisis is the $2.7 billion merger orchestrated in 2024 by Richard Baker, former CEO and executive chairman of Saks Global. As reported by the NY Times, Baker merged Saks with Neiman Marcus Group (which included Bergdorf Goodman) to create what we could very simplistically define as a near-monopoly capable of negotiating “on equal terms” with large groups and brands in general.

However, to finance it all, an enormous debt of about $2 billion was accumulated, under whose weight the entire structure quickly collapsed. According to what Mickey Chadha of Moody's Ratings told the NY Times, it was the fastest failure of a multi-billion-dollar acquisition in recent history. The structural decline in luxury sales then created the conditions for a perfect storm: in the quarter ending August 2, revenues fell by more than 13% compared to the previous year, and for the entire fiscal year 2024, the decline was 10% on a pro forma basis. 

At the end of December, the company behind the shopping center had missed an interest payment exceeding $100 million on the bonds tied to the acquisition, triggering a bankruptcy procedure and unresolved negotiations for a $1 billion emergency financing. The debts then rose to $4.7 billion, were restructured, but in the meantime the liquidity crisis had already led to delayed payments and shipments. At the beginning of January, CEO Marc Metrick resigned, replaced by Richard Baker, while the company declared its intention to sell its assets. But even this was not enough to save the giant from bankruptcy.

Already according to WWD, in addition to the worsening of the American luxury retail crisis of luxury, this bankruptcy is much more serious than the failures already seen in recent years in the department store industry, as Saks Global is the container of three major names in the sector and not just Saks, which headed 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 contractual power. 

What will happen now?

Now that the hypothesis of bankruptcy has materialized, the consequences will go far beyond the closure of a few sales floors. As WWD has already said, it will not be a “contained” failure, but an event capable of propagating along the entire American luxury supply chain. The first impact will hit the supplier brands for which Saks Global is the main or only client capable of absorbing significant volumes of product. In a Chapter 11 scenario (i.e., declared bankruptcy), suppliers risk recovering only a minimal fraction of their credits, between 5 and 10% of what is owed to them. A percentage that, for several brands, would amount to a certain condemnation, as without those payments, the very sustainability of the business would be called into question.

Complicating the situation further is a structural problem. Even for brands that work on consignment or that have merchandise already produced but not yet shipped, alternatives are few. WWD highlights how the department store system is not easily replaceable in the short term; Nordstrom and Bloomingdale’s could theoretically intercept part of that demand, but they operate with already closed purchase calendars and with a positioning that remains, in many ways, tied to the same model that today shows its cracks. The result would be an excess inventory without a real home, destined to hit the market out of time or to be drastically devalued.

As reported by the NY Times in another article, brands like Oscar de la Renta and Altuzarra have stopped shipments for fear of not being paid, and Chanel has withdrawn its products from seven stores. Lawyers like Joseph Sarachek, who represents about 30 vendors, have described a "very tough" situation, with partial payments and residual debts ranging from $50,000 to $10 million per brand. For the public, the upheaval might even prove welcome. According to the report, there will be closures and thus aggressive liquidation sales that could reach up to 85%. 

Now, however, it is Geoffroy van Raemdonck, former CEO of Neiman Marcus, who will have to pick up the pieces and try to save what can be saved, probably starting with a strong cost reduction and a review of inventories and retail strategies. Adding to the difficulty is the fact that competitors like Bloomingdale's and Nordstrom are already taking advantage of the opponent being down to expand, hire staff, and increase space dedicated to luxury brands.

Is there a future for department stores?

At the root of Saks' apparent crisis, one can only wonder if 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 public. At the same time, the VIC (very important clients), those who really drive revenues, are increasingly shifting their purchasing habits toward flagship stores and direct channels. 

Precisely for this reason, the role of the department store as a mediator loses centrality and risks being reduced to a logistical platform, often squeezed between ever-thinner margins and increasingly autonomous brands. Not surprisingly, La Rinascente has repositioned itself as a destination for ultra high-end tourism—just look at the average customer of the one in Duomo in Milan. An effective strategy on the economic level, which, however, has progressively distanced the department store from its original role as a cultural catalyst for the country's fashion. 

And if the 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 not ephemeral. Cases like that of Saks show how fragile this balance has become: when cultural value fades, economic value also quickly begins to suffer.

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.

Takeaways

- Saks Global, which controls Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman, has filed for bankruptcy due to unsustainable debt accumulated after the $2.7 billion merger with Neiman Marcus in 2024, orchestrated by Richard Baker, worsened by a 13% sales drop in the summer quarter and delays in payments to suppliers.

- The crisis is a sign of the structural decline of American luxury department stores, once arbiters of taste and cultural catalysts, now crushed by competition from e-commerce, direct brand stores, and the shift of VIP clients toward personalized experiences.

- Brands such as Oscar de la Renta, Altuzarra, and Chanel have already stopped shipments out of fear of non-payment, risking recovering only 5-10% of their credits in the bankruptcy proceedings, with devastating impacts on the luxury supply chain and possible asset sales to cut costs.

- With Geoffroy van Raemdonck as the new CEO, the company is aiming for a restructuring involving store closures, inventory reductions, and merchandise liquidations, while competitors like Nordstrom and Bloomingdale’s are taking advantage of the situation to expand.

- The future of department stores appears uncertain, with a possible repositioning toward European-style models focused on luxury tourism and immersive experiences, but the traditional role as fashion mediators risks fading in favor of direct and autonomous brand channels.