Saks Global’s trip into bankruptcy court marked a turning of the page for the luxury retailer.
After struggling last year under a heavy debt load and a lack of vendor support, the inventory started to flow again after the company’s Jan. 13 bankruptcy filing.
And the return of product — the life blood of any retailer — was reflected in Saks Global’s sales.
According to court filings, the company paid $76 million for merchandise from Jan. 14 through Jan. 31, while logging a total of $67.4 million in sales and other receipts. Those sales reflect the state of Saks Global when it first filed.
During the same time period, the retailer also paid out $52.5 million in payroll and benefits, $9 million in interest on its asset-backed loan and $6.5 million in rent, among other disbursements.
The result was an operating cash flow deficit of $109.6 million for the second half of January.
But the business started to get more traction in February as the dust settled.
Sales and other receipts coming in totaled $317.7 million, while $454.7 million was spent to bring goods into the stores.
With payroll, rent and other expenses, that worked out to an operating cash flow deficit of $369.4 million. Still, the results help illustrate how the business was revving back up. Saks Global ended February with a cash balance of $467.8 million and is a changed company that plans to keep evolving into its future self.
The reports, which Saks noted do not reflect the “significant progress” made in March, do need to be considered against the backdrop of a complicated restructuring. Saks Global’s results for January and February also include non-cash accounting adjustments, customary year-end tweaks to the books and certain non-cash expenses that were recognized as reorganization costs related to the company’s DIP financing, among other items.
So far, so good for Geoffroy van Raemdonck, the former Neiman Marcus Group chief who took on the rescue mission and stepped in as chief executive officer just before the bankruptcy.
“Since filing for Chapter 11, we have taken decisive steps to stabilize the business and refocus on our core retail operations with the customer at the center,” van Raemdonck said in a statement to WWD. “As anticipated, it will take time to fully realize the results of these actions, but we are encouraged by the growing momentum of our progress. Our sales and inventory results are outperforming our internal plans and we have made meaningful progress in strengthening relationships with our brand partners. We are well-positioned with access to more than $1 billion in committed capital to date, which supports our ongoing transformation as we lay the foundation for an enduring future for Saks Global.”
The company added that it “will have sufficient liquidity to effectively operate throughout the restructuring process, setting us up for a successful emergence.”
All together more than 650 brands resumed shipments to Saks Global, releasing what the company said was $1.5 billion in retail receipts. That’s over 90 percent of the retailer’s expected inventory for the first quarter, which ends May 2.
While Saks Global seeks to find a new — and sustainable — equilibrium where both money and goods flow, it has been reshaping how it’s operating and getting back to its roots as a company that runs stores and is less interested, for instance, in real estate.
The parent company to Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman has moved quickly to trim down, with plans to shutter most of its Saks Off 5th stores as well as 21 department stores. Additionally, the company said it is “prioritizing three go-forward distribution and service center facilities in Texas, Pennsylvania and California” and will exit bankruptcy with “a right-sized capital structure and sufficient liquidity to invest in key areas of the business to support its long-term growth.”
