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Saks Global is leveraging its prime real estate portfolio to navigate Chapter 11 bankruptcy following a debt-laden consolidation of Saks Fifth Avenue, Bergdorf Goodman, and Neiman Marcus. The company secured a $1.75 billion financing package to maintain operations while reviewing underperforming stores. Analysts suggest strategies such as sale-leaseback agreements and targeted closures of dark stores to monetize assets. Internal competition with Neiman Marcus and pressure from luxury brands with direct-to-consumer stores adds to challenges. Prime mall locations could be repurposed, reflecting a broader shift in retail strategies for high-value properties.
Saks Global, the U.S. luxury department store conglomerate, is relying on its prime real estate holdings to navigate bankruptcy and support its operations during restructuring. The company filed for Chapter 11 protection late last week, just a year after a leveraged takeover aimed at consolidating Saks Fifth Avenue, Bergdorf Goodman, and Neiman Marcus into a single luxury powerhouse. Advertisement
To maintain operations during bankruptcy, Saks secured a $1.75 billion financing package, though court approval is still pending. Analysts say the retailer could monetize underperforming stores through sale-leaseback agreements, which would provide liquidity while allowing stores to remain open. Saks operates roughly 125 stores across about 13 million square feet, controlling ground leases at 39 locations, including flagship sites on Manhattan's Fifth Avenue, Beverly Hills, and top-tier malls like Bal Harbour Shops in Florida. The Fifth Avenue flagship store is not part of the bankruptcy filing, as it is leased through a separate entity holding a $1.25 billion mortgage.
Court filings indicate that Saks plans to close around four non-operating dark stores first. Selling these stores could mean discounts of 40-50% from their value as operating stores. To maintain inventory, the company is expected to prioritize payments to vendors after more than 100 brands paused deliveries last year. Experts suggest the financing package could allow Saks to retain and monetize real estate assets strategically rather than being forced into quick fire-sale closures.
Internal competition poses additional challenges, as Saks and Neiman Marcus frequently co-anchor the same luxury malls. Locations such as Houston's Galleria Mall, where both brands operate alongside high-end tenants like Louis Vuitton, Gucci, and Balenciaga, may need to be reviewed and potentially sold. Analysts note that luxury brands increasingly favor direct-to-consumer stores, offering VIP experiences and personalized service, which adds pressure to multi-brand department stores.
Retail analysts also point to industry trends: Macy's, which owns Bloomingdale's, is closing underperforming stores to focus resources on high-performing locations. Experts believe that owners of premium malls may welcome opportunities to repurpose large anchor spaces into mixed-use developments or split big-box formats to refresh tenant mixes.
Source Reuters
5th Jun, 2025
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