Saks Files For Bankruptcy: Inside The Missteps That Brought A Luxury Giant To Its Knees

On a chilly January morning in midtown Manhattan, tourists lingered over rows of designer handbags at Saks Fifth Avenue’s flagship store. Balenciaga, Burberry and other luxury labels still gleamed behind glass, but behind the polished displays, trouble was brewing.

Penelope Nam-Stephen, a longtime customer who splits her time between New York and Boston, approached the Diptyque counter looking for a familiar home fragrance. She had already struck out at the brand’s Boston location shortly after Christmas and hoped Manhattan would offer better luck.

“Do you have anything in the Berries fragrance?” she asked.

The answer was blunt. Everything was sold out.

That empty shelf told a bigger story. Days later, Saks Global – owner of Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman – filed for Chapter 11 bankruptcy protection, sending shockwaves through the luxury retail world.

A High-Profile Fall

The company confirmed it had secured $1.75 billion in emergency financing from investors led by Bracebridge Capital and Pentwater Capital. The cash injection will keep stores open as restructuring begins, but uncertainty now hangs over one of America’s most iconic department store chains.

Saks’ financial troubles intensified after its 2024 acquisition of Neiman Marcus in a $2.7 billion deal that executives claimed would cut costs and strengthen both brands. Instead, the merger became a turning point for the worse.

The company recently failed to make a $100 million interest payment tied to more than $2.2 billion in debt taken on to fund the acquisition – a red flag that pushed it into bankruptcy court.

A Strategy That Backfired

Luxury department stores were already under pressure before the deal. Online shopping, shifting consumer habits and rising costs had eaten into sales. Saks Fifth Avenue began reporting double-digit quarterly declines as early as 2023.

Retail analyst Mark Cohen, former head of retail studies at Columbia Business School, described the company’s trajectory as “a train wreck in slow motion.”

“The merger magnified problems that were already there,” he said. “You simply cannot run a retail business without paying your suppliers on time.”

According to Cohen, issues trace back more than a decade, when leadership focused on deal-making rather than strengthening operations. By the time Neiman Marcus entered the picture – itself fresh from bankruptcy – Saks was already stretched thin.

Vendors Left In Limbo

Long before the bankruptcy filing, vendors were raising alarm bells. Payment delays stretched from weeks into months. Some brands halted shipments altogether. Others continued supplying out of fear of losing shelf space in a major luxury retailer.

Last year, former CEO Marc Metrick wrote to suppliers promising to clear overdue payments in 12 instalments. The reassurance failed to calm nerves.

By November, finance firm Hilldun, which backs orders for around 130 brands working with Saks, stopped approving new purchases.

“We had no choice,” Hilldun CEO Gary Wassner said. “Everything is on hold.”

One anonymous vendor told the BBC he was still owed over $20,000 for orders shipped months ago and had an additional $35,000 worth of stock frozen after Saks told him to stop fulfilling orders.

“This feels desperate,” he said. “Nothing they do makes sense anymore.”

Customers Feel The Impact

Shoppers have noticed the strain. Stock shortages, delayed deliveries and cancelled orders are becoming more common.

Richard Browne, a 66-year-old marketing consultant from North Carolina, has been shopping at Saks online for years. Last summer, he began seeing more “out of stock” notices. In January, he ordered discounted Michael Kors jeans, only to receive an email the next day saying the item was unavailable.

“It’s frustrating,” he said. “You spend time shopping, then they cancel. I’m definitely less likely to buy from them now.”

Leadership Shake-Ups

The turmoil has also rattled the executive suite. Metrick resigned abruptly in January. He was replaced by Richard Baker, who led the Neiman Marcus acquisition. Weeks later, the company announced another change: Baker will step aside, with former Neiman Marcus boss Geoffroy van Raemdonck set to take over.

Meanwhile, Saks has been selling off assets, including a property in Beverly Hills, in a scramble to raise cash.

What Comes Next?

Bankruptcy does not automatically mean store closures, but analysts are skeptical about Saks’ ability to recover.

“The damage to trust – with customers and vendors – is significant,” Cohen said. “Rebuilding that will take more than financing.”

For now, shoppers continue browsing designer racks while suppliers wait for overdue payments. The glittering storefronts remain, but behind them lies a cautionary tale of ambition, debt and a luxury empire struggling to stay upright.