Who here is surprised at the reports that Saks Global is looking to sell a 49 percent stake in its Bergdorf Goodman operation?
Who here has just not been paying attention to Richard Baker’s game plan for the past 20 years?
Baker runs Saks Global — before shutting down Hudson’s Bay Co. it was known by that name and since Baker has decided he is god’s gift to the retailing business his corporate entity has had several other names and included all kinds of brands long since trashed in the process.
Baker got ahold of Bergdorf’s when Saks bought its parent company Neiman Marcus in late 2024, promising all sorts of big plans, using words like synergy and innovation. Of course, since then, he has tried to shut down the Neiman flagship in Dallas, which, granted, is probably a money loser but still sets the tone for the entire brand. He’s also closed a few other locations amidst talk that there will be more retail blood sooner rather than later.
Now comes word — as yet unconfirmed — that Saks is looking to sell of a big chunk of Bergdorf’s, the iconic retail brand that operates a single store location just a block away from Central Park on Fifth Avenue, where its neighbors include Tiffany, Louis Vuitton and just about every luxury jewelry retailer in the world. Not exactly a bad location, right?
Saks would generate perhaps $1 billion in this purported sale, which no doubt would be to some investment group, perhaps with roots in the Middle East. It would almost certainly not be to anybody with any real experience running a retail business.
What would happen next? One has to assume that Bergdorf is not exactly a cash cow given its very slim customer base. When you walk the store, there are some very rich-looking people shopping there but their numbers are rather limited and let’s just say you hardly ever need to wait in line to get your purchase rung up.
So whoever is buying this is doing so for only one reason: the real estate. Bergdorf’s location at the corner of 57th Street and Fifth Avenue is right in the heart of New York City’s latest luxury residential boom, where ultra-slim, ultra-tall towers are being constructed on lots that previously would be better suited for low-rise retail, not 1,000-foot condominium complexes.
You could think because the Bergdorf building, constructed in the mid-1920’s replacing some Vanderbilt family mansion and looking more like a French chateau than a store, is protected by New York City historical preservation laws which designated it as a historical landmark in 2016 that any further development of the site would be prohibited.
You would be wrong. Just meander a few blocks south on Fifth Avenue to the former Lalique store which was essentially gutted save for the historically preserved façade — with gorgeous Lalique windows — and used as the streetscape for a giant office tower behind it. The first few floors housed a Henri Bendel flagship that opened in the 1980s but was eventually closed in 2019 by its owner, The Limited. The store, last time we checked, remains empty.
The same strategy could be used for the Bergdorf building except developers would save most of the structure, keeping the ground floor for some LVMH brand (or even a mini-BG boutique), converting the upper floors to magnificent condos and then piggybacking a giant residential tower over the whole thing where prices would easily stretch into nine figures. The views on those upper floors would be spectacular and the address would put to shame any of those other towers down 57th Street.
But there’s just one catch: the actual Bergdorf Goodman real estate is owned by the Goodman family itself and did not go along with either this Neiman deal or apparently any previous acquisition involving the brand, of which there were several over the past 50 years.
So if there were a real estate play to all of this, the Goodman family would have to go along it and again, it doesn’t seem like they’ve been up for this previously. However, money talks and with the threat of the retail business being shut down they might be more amenable to such an arrangement now. Sure it’s a stretch but you never know.
So the true value of Bergdorf Goodman is not its lovely but archaic retail business. And with a partner developing the site Baker could play dumb — not hard for him — and say they made us do it…not that he’s shown any qualms about shutting down retail brands (see HBC, Lord & Taylor, Fortunoff and a few others too numerous to mention).
This kind of financial engineering — maybe manipulation is a better word — is Baker’s specialty. We certainly know it’s not being a retailer, something he himself fessed up to not all that long ago: “Everyone seems to have forgotten that I was a real estate guy, still am” is the direct quote.
Baker owes tons of money to lots of people for all his financial manipulations…er, engineering… and selling a big piece of Bergdorf helps bring that down. Ultimately, it could also ultimately result in bringing down something else: Bergdorf Goodman.
WarrensReport 