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TORONTO — Several North American department stores are joining forces under a deal that will see Hudson’s Bay Co. buy Neiman Marcus and spin it out into a larger business along with some of its other prestige retailers.
HBC’s US$2.65 billion acquisition, announced Thursday, delivers Canada’s oldest company ownership of Dallas-based Neiman Marcus Group, which has a network of 38 luxury department stores under the Neiman Marcus and Bergdorf Goodman banners. Both brands sell designer apparel, accessories and housewares.
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Under the deal, Toronto-based HBC will group Neiman Marcus and Bergdorf Goodman in a new business alongside Saks Fifth Avenue and Saks Off 5th, which it has owned since 2013.The new entity will be called Saks Global and run by Saks.com chief executive Marc Metrick.
The union of brands puts to rest long-standing speculation that the retailers were on the verge of a merger and will test whether the companies are stronger together than apart.
“For years, many in the industry have anticipated this transaction and the benefits it would drive for customers, partners and employees,” HBC’s executive chairman and chief executive Richard Baker said in a release announcing the deal.
“This is an exciting time in luxury retail, with technological advancements creating new opportunities to redefine the customer experience, and we look forward to unlocking significant value for our customers, brand partners and employees.”
Neiman Marcus and HBC declined interview requests to discuss the deal, which will see e-commerce goliath Amazon.com Inc. and software giant Salesforce become investors in Saks Global. The tech companies did not respond to a request for comment seeking information on whether they were taking an ownership stake in Saks Global as part of the transaction.
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The tie-up comes at a critical juncture for both the retail market and luxury brands, which have watched consumers cut back on purchases because high inflation and interest rates that materialized just as businesses began to recover from the COVID-19 pandemic. At the same time, department stores have fallen out of favour amid the rise of e-commerce and direct-to-consumer sales.
These factors have weighed on HBC, which laid off staff, closed some of its stores and sold off millions in real estate in the last few years.
Thursday’s deal will see HBC “recapitalized as a stand-alone entity, separate from Saks Global, with significantly reduced leverage and enhanced liquidity,” a press release said.
HBC will continue to wholly own its Canadian retail and real estate assets, including Hudson’s Bay and a $2 billion real estate portfolio. As a result, HBC’s Canadian business will be well positioned to support future growth, while continuing to serve its loyal Canadian customer base.
Saks Global, meanwhile, will have control over US$7 billion in real estate assets owned by HBC’s U.S. division and Neiman Marcus Group.
Ian Putnam, president and chief executive of HBC Properties and Investments, will become chief executive of Saks Global Properties and Investments, which will manage, maximize and enhance the company’s robust portfolio of assets.
Metrick and Putnam will report to Baker, who will serve as executive chairman of Saks Global.
Baker took HBC private in 2020, in the wake of the company closing Home Outfitters and selling Lord & Taylor to fashion rental subscription company Le Tote Inc.
This report by The Canadian Press was first published July 4, 2024.
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