January 1, 2028: So, it’s been three years since the acquisition of Neiman Marcus by Hudson’s Bay Co., the parent company of Saks Fifth Avenue, and a lot has happened in those 36 months.
Not much of it has been good.
We all know Richard Baker and HBC’s track record in running retail businesses has been pretty dismal. The list of discarded and essentially defunct store brands reads like a who’s who of once-thriving operations that the company threw on the retail trash pile: Lord & Taylor, Fortunoff and Home Outfitters lead the list. Then there’s the closed Off 5th outlet stores and the deteriorating department store mothership brand in Canada, to say nothing of its ill-fated and illogical move to take over the European chain Kaufhof that left HBC with schnitzel all over its face.
Even the Saks brand itself, theoretically the shining star of HBC, is a great big black hole since the parent company went private. In the Christmas season of 2024 when the company decided to shut down its very popular and amazing brand-building light and music show extravaganza on the façade of the Fifth Avenue flagship it talked about reprioritizing its holiday displays but everyone knew it was all about one thing: saving money for a balance-sheet-stretched business.
And we won’t even mention all of those reports during that era of vendors who said they weren’t being paid for orders, with invoices collecting 90-day and even 120-day dust somewhere in the accounts payable bin in Toronto.
So HBC’s takeover of Neiman Marcus and its ability to get financing from banks – Amazon and Salesforce went into the deal too for reasons that still don’t make much sense – while not exactly a surprise was certainly not a terrific piece of news for employees, suppliers and, oh yeah, loyal customers of both brands who didn’t quite understand what it meant to them. Now three years later, we have some of those answers:
• Things got off to a pretty bad start right after the deal closed in December of 2024. In letters to Neiman and Bergdorf Goodman customers reassuring them that nothing would change with the merger — “there are no changes with your shopping experience or your relationship with your stylists or sales associates” — the letter then said there were also no changes with their store credit cards, frequent shopper accounts or other things of the sort. But then it added the deadly “at this time.” Talk about an open-ended caveat. But that wasn’t even the worst part: the letter wasn’t signed by the president, a senior executive…or anybody for that matter. Talk about a generic piece of correspondence. We’d bet AI, even at its primitive 2024 level, had a lot to do with it. It was a lame and perhaps telling signal about how Saks and HBC valued their new customers.
• The first thing to go were eight stores where the two brands co-existed in the same mall or shopping center. You like to think HBC was probably strategic in deciding who stayed and who was shut down but with Saks execs running the show it was no surprise that more Neiman’s closed. There were a few additional shutdowns in the 10 other areas where the brands had locations within a mile of each other. Again, Saks came out better in this deal too.
• There was an 11th location of overlapping but it involved Saks and Bergdorf Goodman — which came along with Neiman’s — and were within seven blocks of each other in Manhattan. HBC solved that one easily: they sold off Bergdorf’s. It was never going to be a fit and the parent company has a history of discarding pieces that aren’t part of the bigger picture. BG went to Jamie Salter and ABG (saved on stationery too, right?) which quickly starting putting the brand into Penney’s and other down-market retailers. As such it didn’t need – or want – the actual store so the real estate on the corner of Fifth Avenue and 57th Street is now being cleared for a 142-story “pencil” tower condo along Billionaire’s Row. Rumor has it that HBC’s Baker is getting the top three floors at a special insider’s rate where he expects to spend at least three weeks a year visiting. It will be a corporate residence on HBC’s books.
• The Neiman Marcus Last Call outlet brand was resurrected but not as free-standing stores. Instead they are co-located departments within the Saks Off 5th stores proving the ancient retail proverb that two wrongs don’t make a right. In the physical store category that is the strongest in all of retailing, HBC has proven it has absolutely no idea what it is doing. It is now proving that with two brands instead of one.
• Since consolidating all buying and merchandising for Saks and NM in New York City and closing what had been the buying office in Dallas, the two brand’s go-to-market strategies have looked remarkably similar. What once distinguished each nameplate to its loyal shoppers has been largely lost and the iconic personalities of each – a little more modern at Saks, a little more classic at Neiman’s—have been homogenized into an ersatz luxe look that doesn’t really serve either customer.
• As it had already spun off the Saks e-commerce operation into a separate corporation, thereby reaping a pretty sweet payout from investors if not making much sense for the siloed merchandising departments, it was a no-brainer to fold Neiman’s online division into that entity. NM was an early adapter to direct-to-consumer sales, having had a pretty robust print catalog business back in the day before it all moved online. Saks on the other hand was late to the e-party and has been playing catch-up ever since. We suspect rather than getting smarter with what Neiman’s knows Saks has just dumbed it down to match its new partner.
• In the meantime what exactly is going on with HBC’s financial health remains a big fat mystery. It took on more debt to do the $2.65 billion Neiman deal and combined with what it owed from going private it wasn’t surprising that over the past three years it has stepped up its deconstruction efforts, selling off some real estate here, laying off some people there and generally mortgaging its future. Any talk of going public again has been met with chortles from Wall Street…not that those boys have much of a sense of humor.
All-in-all it’s been a fast three years for Saks Global, the name adapted for the combined companies and one that defines “global” as…well, pretty much the United States and that’s it. In the meantime, the lights have still stayed off at Christmas time on the Fifth Avenue store.
As far as we know, they are still on inside.
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