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Saks Fifth Avenue and Neiman Marcus Merge in Luxury Retail Deal

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Saks Fifth Avenue’s parent company, HBC, is set to acquire Neiman Marcus for $2.65 billion. This merger will create a new entity called Saks Global, combining two of America’s most prominent high-end department store chains.

The deal brings together approximately 175 stores, including the Bergdorf Goodman in New York City. Saks CEO Mark Metrick is slated to lead the new company, which will operate both full-price stores and off-price outlets.

Richard Baker, HBC’s chief executive, emphasized the importance of human touch in luxury retail.

“People have forgotten how important people are. When selling luxury products, you need beautiful stores and salespeople customers trust,” Baker told the New York Times.

Intriguingly, e-commerce giant Amazon will play a role in this merger, taking a minority stake in Saks Global and providing technology and logistics services. According to Bloomberg News, this will be Amazon’s first investment in a brick-and-mortar retailer since its acquisition of Whole Foods in 2017.

Business software company Salesforce will also be a minority investor, building on its existing relationship with Saks Fifth Avenue.

Retail analyst Neil Saunders of GlobalData noted that while the merger has been long anticipated, Amazon’s involvement “adds a bit of spice” to the deal. He suggested that Amazon’s expertise could give the new entity an advantage in remote shopping, which has become increasingly important to younger consumers.

The merger is being financed through a combination of funds raised by HBC and debt offered by affiliates of Apollo Global Management. However, the deal still requires regulatory approval, with the Federal Trade Commission’s review potentially taking up to nine months.

Both Saks Fifth Avenue and Neiman Marcus have rich histories in American retail. Neiman Marcus, founded in 1907 in Dallas, has weathered various ownership changes and a brief bankruptcy in 2020 during the COVID-19 pandemic. Saks, established in 1924 in New York City, has been under HBC ownership since 2013.

While the merger creates a formidable player in luxury retail, challenges remain. The combined entity will still face stiff competition from global luxury conglomerates like Kering and LVMH. Additionally, both chains have struggled with growth in recent years, a challenge that the new Saks Global will need to address.

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