Saks Global vendors looking to get their money back on unpaid invoices shouldn’t get their hopes up.
They might recover a small percent of what’s owed — if anything at all — unless they end up on the Saks Global “critical” vendor list.
“Saks Global internally, with the input from their financial advisers, will compile a list of critical vendors Saks believes it needs to have goods from, to fill their shelves to successfully reorganize. Saks will never share that list publicly,” one legal source told WWD.
“The critical vendor money is to help take care of pre-petition liabilities and they could also deploy those funds to get goods delivered so Saks. It’s part of the [debtor-in-possession financing]. This will happen soon. Presumably, within a few weeks. It’s urgent.”
Bankruptcy court approved the retailer’s $1.75 billion financing package over the objections of Amazon, a backer of Saks Global’s $2.7 billion deal to buy the Neiman Marcus Group, at the end of a seven-and-a-half hour hearing Thursday.
Critical vendors receive DIP numbers setting them up for prioritized payments, as part of the pool of “go-forward” vendors. DIP numbers enable post-petition shippers to get paid on a new schedule to be determined by the court. With these DIP numbers, merchandise to Saks, Neiman’s and Bergdorf Goodman could arrive relatively quickly, since many vendors held back shipments to Saks Global last year as the luxury retailer failed to meet commitments and the business was hemorrhaging.
“The DIP loan contemplated two tranches for critical vendors,” said the legal source. “Saks Global has $320 million to play with to make deals with its critical vendors. $120 million has already hit the Saks account. Another $180 million is on its way. The source said the DIP money will be used to both pay critical vendors from past shipments, and pay for new shipments.
“I imagine nobody is shipping goods until they get a DIP number, and a plan is presented to the court and the court approves a vendor list,” said Allan Ellinger, cofounder and senior managing partner for MMG Advisors. “Geoffroy van Raemdonck (the new Saks Global CEO) and his legal team will have to submit a plan, indicating who is going to get paid and how much, and come up with a list of critical vendors needed to keep the business alive.”
Also expected soon — the formation of an unsecured creditors committee, possibly in the next week or so, to maximize potential recovery for creditors. The committee will hire its own attorney and will be composed of vendors, landlords, unions, trade creditors and others.
Longer term, vendors have plenty to think about. Saks Global is already in the process of determining which stores to close and which to continue to operate. Stores closing, according to one source, are not likely to run typical going-out-of-business sales so as not to project the whole company is going dark. Saks Global is expected to hire a third party to assist in selling off merchandise in stores that will close. Wholesale merchandise will either be redistributed to go-forward stores, or sharply discounted, potentially damaging the brand image. It’s out their control since Saks owns this merchandise.
It’s a different scenario for brands operating leased shops. They own the merchandise and control the pricing of their merchandise. They can decide to redistribute it to other Saks or Neiman’s stores, to competitors of Saks and Neiman’s, or to their own stores. They could also bring goods back to their warehouses. Chanel has pulled merchandise in its leased shops in at least seven Saks doors, and is said to be searching for alternative space outside of Saks in at least some of those locations.
“Wholesale claims are unsecured, but theoretically, since concession goods are not Saks goods, these brands consider their claims secured,” the legal source said. Goods shipped just before the bankruptcy, rather than months before, could be considered priority claims.
Julie Petit, a partner at Forvis Mazars, which audits luxury brands including several that sell Saks, said: “Brands that operate concession stores within Saks face very different decisions than those who rely on Saks as a wholesaler. With wholesalers, what happens to the inventory? What’s the financial impact, and how will they reach their customers in the future. There are clearly a lot of questions.”
“Brands are going to want to stay in the markets where they’re selling [successfully] but it’s a dynamic situation,” said Petit.
The Saks agreements between wholesalers and those operating concession shops are very different. “Operators of concessions tend to be paid quicker,” said Petit.
One retail expert said the LVMH Moët Hennessy Louis Vuitton brands were getting paid every two weeks or even sooner. Chanel, however, according to court papers, was in the hole for $136 million.
“Lease shops are no panacea,” said one retail expert. “They only work in big doors that do a lot of volume. But lease shops are staffed better and never have an issue of too many goods. It’s product flow. That’s the key.”
If Gordon Brothers, or some other third party, conducts a closeout sale at Saks, concessions don’t have to participate. “They’ll remove the goods out and put them back in a warehouse, or ship them to another store,” said the retail expert. “But if you’re a wholesaler, what are you going to do? You suck it up.”
The Saks Global bankruptcy will fuel some industrywide trends:
- First, brands will accelerate rollouts of leased shops and their own freestanding stores and further their reliance on e-commerce. However, small brands can’t afford to build and staff leased shops inside department stores, leaving them with few options for the future.
- Secondly, Nordstrom, Bloomingdale’s and Dillard’s will capitalize on a transfer of brands and customers to their stores amid Saks Global closings and uncertainties.
- Beauty brands will also continue to look for their best avenues to consumers. “The beauty guys will intensify their business with Amazon, Dillards, Macy’s, Bluemercury, Sephora and Ulta. I don’t think [this bankruptcy] will be a huge issue for them,” the retail expert said.
There’s some evidence from Consumer Edge — a New York-based consumer data and insights company, best known for U.S. consumer credit and debt card data set — Saks shoppers are starting to migrate to other retailers.
According to Michael Gunther, vice president of research and market intelligence at Consumer Edge, his firm’s analysis of U.S. card data found that shoppers who purchased at Saks Fifth Avenue in the fourth quarter of 2024, but did not return to the store in the fourth quarter of 2025, didn’t stop spending during the holiday. Instead, they took those dollars elsewhere.
Spending among former Saks shoppers who made at least one purchase there in the fourth quarter 2024, but none a year later, rose more than 200 percent at Zales, which had muted growth overall. Cole Haan saw a 30 percent increase in business from former Saks shoppers, and Rent-the-Runway saw spending among lapsed Saks shoppers rise more than 75 percent year-over-year. Consumer Edge also reported that Old Navy and Hollister picked up some business from former Saks shoppers, suggesting selective trading-down for basics.
“Surprisingly, we did not see evidence of this group shifting to competitive, full-line department stores,” said Gunther. “Our data does not show other department stores benefiting from people not shopping at Saks — yet.”
“You’ve got to wonder what are customers thinking about Saks and Neiman’s stores,” said the retail expert. “Are they going to shop there wondering if they will get their money back if they make a return?”
According to another industry expert, from the Saks Global point of view: “The whole idea in a bankruptcy is to minimalize the professional fees to benefit the estate. That depends on how long the process goes on for. A lot of professional fees are coming off the top.”
MMG’s Ellinger said: “There will always be opportunities for competitors to muscle in on available consumer dollars, as Saks Global looks at store closings. I’m confident Saks and Neiman’s will survive. It’s a question of having the right vision and properly recapitalizing the business and refocusing it. The vendors will have be very comfortable with the plan. Saks Global also has to make the factoring community feel very comfortable. CIT, Wells Fargo, Hildun, Milberg, all of these factors have be very conservative and cautious about extending credit to Saks vendors.”
The real estate executive questioned whether van Raemdonck will continue what Richard Baker established — a centralized buying team for both Saks and Neiman’s. “How are you going to buy for these two stores? Buyers don’t know how to do this. It will end up looking like one chain with the same merchandise and different nameplates.
“The focus is now on vertical integration and controlling the customer interface but my sense is people are going to give this a shot. Richard Baker is out. You couldn’t get an answer from him and his team on getting paid,” the executive said. “Geoffroy van Raemdonck is stable.”
And after a year or more of turmoil, stability is what the vendor community wants.
