Beyond the Balance Sheet: The Real Challenge Facing the New Saks Global

Armed with $1 billion in fresh debtor-in-possession financing, the luxury retailer must now solve a fundamental traffic problem: turning casual midday browsers into high-spending destination shoppers.

Now comes the hard part for Saks Global. After filing for bankruptcy, the company said it is working to optimize its “operational footprint” while leveraging the Chapter 11 process to reallocate resources toward high-potential areas and ensure long-term stability.

Business jargon translation: the retailer is going to trim the fat and redirect its business to drive sales and boost profits. The company said the aim is to bolster luxury retail brands that are best positioned for sustainable growth. And to maintain business continuity during this transition, Saks Global said it has filed “first day” motions with the court. Once approved, these motions will allow the company to operate in the ordinary course by honoring customer programs, maintaining employee payroll and benefits, and ensuring consistent payments to vendors.

Business jargon translation: the retailer is going to trim the fat and redirect its business to drive sales and boost profits.

The restructuring will be fueled by a $1 billion in debtor-in-possession financing. This immediate capital provides the necessary liquidity to fund day-to-day operations and drive key turnaround initiatives throughout the legal process. The financing comes from an Ad Hoc Group that was formed, which also committed an additional $500 million in exit financing to support the company upon its expected emergence from Chapter 11 later this year.

The Path Ahead

To lead the turnaround, Saks Global named Neiman Marcus Group CEO Geoffroy van Raemdonck as its CEO. “This is a defining moment for Saks Global, and the path ahead presents a meaningful opportunity to strengthen the foundation of our business and position it for the future,” he said in a statement, adding that the company “will navigate this process together with a continued focus on serving our customers and luxury brands.”

Van Raemdonck has his work cut out for him, but he’s been down this road before. In 2020, he led Neiman Marcus through a Chapter 11 bankruptcy, which successfully wiped out roughly $4 billion in debt. Van Raemdonck also pivoted the company away from being a traditional department store toward a “luxury relationship business.” This focused heavily on high-net-worth individuals (the top 2% of customers who drove 40% of sales).

Pandemic Downsizing

In 2020, at the peak of the pandemic, Neiman Marcus Group significantly reduced its corporate real estate footprint and moved toward a remote-first, hybrid model as part of the restructuring. While not closing entirely, the company also downsized its Dallas headquarters space from 500,000 square feet to roughly 100,000 square feet. 

During the remote/hybrid period, van Raemdonck and his leadership team deployed a strategy to shift the culture of the company as well. Underpinning the strategy was a conscious effort to be more compassionate. While I was at WWD, I worked on several custom content projects for the Neiman Marcus Group and interviewed van Raemdonck and his executive team. They called the initiative, “Leading with Love,” and they meant it.

For example, if there was a team meeting on Zoom and suddenly the five-year child of one of the participants jumped in their lap, that was acceptable. Leading with Love meant practicing empathy.

By 2022 and 2023, the Neiman Marcus Group reported positive EBITDA and strong sales growth. This performance made the luxury company an attractive target, leading to its $2.7 billion acquisition by Saks Fifth Avenue’s parent company (HBC) in late 2024.

While the sale was seen as a win for Neiman’s previous owners, the “turnaround” has been overshadowed by the immediate struggles of the newly formed Saks Global. The integration of Saks and Neiman Marcus, finalized in December 2024, struggled almost immediately with massive debt loads and a cooling luxury market.

The “Midday” Traffic Trap

The road to recovery will be challenging. Shira Petrack, head of content at Placer.ai, just penned a new report looking at Saks Global. “Saks Global’s bankruptcy was triggered by financial pressure, but traffic and loyalty data show that softer consumer engagement was already a challenge before supplier issues intensified,” Petrack said in her report. “Compared with peers, Saks Fifth Avenue and Neiman Marcus attract fewer destination-style visits, with traffic skewing toward weekday, midday, and low-frequency trips.”

Petrack said analyzing in-store behavior at Saks Fifth Avenue and Neiman Marcus relative to other premium department stores is also revealing. “Both banners skew more heavily toward midday and weekday visits than Nordstrom or Bloomingdale’s, a pattern that suggests a greater reliance on proximity — and convenience-driven traffic rather than by planned destination trips,” she noted.

This is in contrast to competitors such as Nordstrom and Bloomingdale’s who Petrack said capture more visits “during evenings, and weekends – times typically associated with browsing, social shopping, and occasions when shoppers are more willing to spend time in-store.”

Petrack said these traffic patterns “reinforce the idea that Saks and Neiman Marcus are currently attracting more ‘pop-in’ visits than experience-led ones.” She said that Saks Global’s path out of bankruptcy “depends on repairing its balance sheet while rebuilding in-store experiences that support destination-driven shopping.”

The company may also need to lean into leading with love, again.