The acquisition of Neiman Marcus by Saks is headed for closure, putting the combined Saks Global on equal footing with Nordstrom, a surprise beneficiary from the deal.
The Wall Street Journal just broke the news that luxury retail leaders Saks Fifth Avenue and Neiman Marcus Group (NMG) have reached a merger agreement. Saks will pay $2.65 billion to acquire NMG and its 36 department stores, two Bergdorf Goodman locations and five Last Call outlets.
Saks brings 39 stores, 95 Saks Off 5th outlets, and a separately operating Saks.com business to the party to be called Saks Global. Long-time HBC executive and current CEO of Saks, Marc Metrick, will become Saks Global’s chief executive officer.
While the combined companies will create a luxury retail powerhouse – totaling some $10 billion in sales – bigger isn’t always better in the luxury world where the personal connection between the customer and the store and its sales associates are key.
During Geoffroy van Raemdonck’s six-year tenure with NMG, including seeing it through its 2020 bankruptcy, he built a strong culture of caring among his 10,000+ strong team. This news is sure to take the wind out of their sails – pun intended – whether van Raemdonck stays or goes. Either way, things are going to change big time at Neiman Marcus.
Looking over the luxury retail landscape, Nordstrom, renowned for its customer service and carrying many of the same brands as Saks and Neiman Marcus, is ready to take care of luxury customers who may be turned off during the transition period.
These customers are the kind of folks who pay attention to details in the business world and will understand the Saks-NMG deal was made in the interest of the owners and financiers, not the customers. Their loyalty can be easily transferred, even if their accumulated loyalty points can’t.
Nordstrom’s 93 stores can become a shining beacon for luxury shoppers looking for the personal touch that may get lost in the shuffle. And with brothers CEO Eric and president Pete Nordstrom at the helm, they carry on the family legacy of patriarch John Nordstrom from the company’s founding in 1901, something that Saks and Neiman Marcus lost along the way.
First and foremost luxury retail is a people, not a product business and Nordstrom looks to be the surprise beneficiary from the merger as luxury consumers seek to find a store that still feels like home.What We Know
The companies have made no official announcement yet or responded to request for comment, but here’s what WSJ and the New York Times have reported.
Saks owner Hudson Bay Company (HBC) will provide $2 billion of financing through its existing investors, including HBC chairman and CEO Richard Baker and his son’s private-equity firm NRDC Equity Partners.
