Updated 2:48 p.m. ET Oct. 16
Saks Global, impacted by ongoing inventory issues and higher costs, reported top- and bottom-line declines in the second quarter.
Revenue for the quarter ended Aug. 2 fell 11.1 percent to $1.6 billion from $1.8 billion a year earlier. Gross merchandise value totaled $2 billion, down slightly from $2.1 billion in the year-ago quarter.
And the net loss was $288 million compared with $271 million a year earlier, taking the-then separate Saks Fifth Avenue and Neiman Marcus businesses together.
You May Also Like
Related Articles
“Our second-quarter sales results were softer than expected, largely due to inventory challenges, and these challenges continued into the third quarter. That said, we are encouraged by the resilience of our concession business, which continues to reflect strong demand from luxury consumers,” said Marc Metrick, the chief executive officer of Saks Global Operating Group, in a statement. “With receipt flow improving and the ongoing relative strength of our concession business, we continue to see evidence that when inventory is present, we see improvements in the top line. We expect inventory levels to normalize through the holiday season and into 2026, supporting improved sales performance as we move forward.”
Adjusted losses before interest, depreciation and amortization came in at $77 million, compared to a loss of $41 million in the prior-year period. The decrease in adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, was driven primarily by unfavorable business performance, including a higher proportion of fixed expenses on lower levels of revenue, Saks Global indicated.
Saks bought the Neiman Marcus Group for $2.7 billion in December — giving it a mega presence in U.S. luxury retailing that includes Saks Fifth Avenue, Neiman Marcus, Bergdorf Goodman, Saks Off-5th, Last Call and Horchow.
While the second-quarter results were disappointing, officials cited improvement in inventory flow and progress capturing synergies in the wake of the acquisition.
Metrick said the company is executing on approximately $300 million in run-rate synergies, “nearly double the expectations outlined at transaction close for year one. Regarding full-year fiscal 2025, the company is on track to deliver over $200 million of these synergies as cost savings within the year. This accelerated synergy realization is especially notable given costs expected to achieve these synergies remain unchanged. The company is confident in its ability to reach our accelerated annualized synergy target of $600 million over the next few years.”
Metrick told WWD that Saks Global is capturing synergies largely through integrations with Neiman Marcus.
“There’s a lot of technology where we have already saved on,” the CEO said. “We have new contracts with our key carriers. There’s been a significant reduction in our headcount and cost savings through eliminating redundant functions. There’s been headquarters savings where we have been able to streamline offices. We operate now under three fulfillment centers,” half as many as before. “Some were operated by third parties that we were paying. We’re now in control of the buildings that we have. And you’ve got the combination of our merchandising systems, which is going to be able to unlock significant revenue and margin capability across the network.”
He also cited the formation of a central buying team covering Neiman Marcus and Saks Fifth Avenue, while Bergdorf Goodman maintains a separate team.
“It’s a much more strategic and broader integration than just job reductions. That’s important for people to understand,” Metrick told WWD.
Saks’ purchase of Neiman Marcus significantly increased the company’s debt load. There’s also an increased level of urgency to repair relations with certain vendors awaiting overdue payments, and Saks Global, like other retailers, is up against macro headwinds and a soft global luxury sector.
Total debt for Saks Global at the end of the second quarter amounted to $4.7 billion, including approximately $1.1 billion in borrowings under the company’s asset-based lending agreement, $2.5 billion in aggregate senior secured notes, the $1.25 billion non-recourse mortgage on the Saks Fifth Avenue flagship, and borrowings of approximately $29 million related to Saks Off5th.com facilities. Saks Global’s pro forma debt stood at $4.9 billion after the completion of a financing transaction in August 2025. The company ended the second quarter with $1.9 billion worth of inventory.
Sources tell WWD that Saks Global continues to be late paying certain vendors. Also, some vendors have recently discontinued shipping Saks, either voluntarily or by design by Saks.
Responding to questions regarding late payments, Metrick told WWD: “We’re in a place with our brand partners where they know exactly what’s happening. That doesn’t mean they are 100 percent clear. It doesn’t mean there aren’t moments when they’re frustrated. It doesn’t mean that [we’re] not going to get a call. It doesn’t mean there aren’t a few where it’s more complicated. But I would say, by and large, we continue to make improvements on getting into a much better place with our brand partners.”
Brandy Richardson, Saks’ chief financial officer, added: “With most of our brand partners, especially the larger volume ones, we’re not behind on any payments. We continue to make good on all of our payment plans, which involved trade payables we had coming into the year, that at the end of the second quarter, was less than 15 percent of the trade payables. And we continue to pay on that. We started those plans in July, and we continue to pay those down every month.”
To help raise cash, Saks Global is considering strategic alternatives for Bergdorf Goodman, including a possible sale of a minority stake in the luxury emporium, though no deal is guaranteed. “This is a non-controlling minority interest that we’re looking at, but Bergdorf’s remains core to our strategy,” Metrick said. “It’s really a way to improve our capital structure and strengthen our balance sheet. But it doesn’t change our plans for Bergdorf’s, which we are very excited to have.”
Sales performance in the second quarter was softer than expected, largely due to inventory challenges, but concession sales improved over last year’s levels, indicating strong demand by luxury customers, the company indicated.
Despite the tough quarter, Metrick said he expects better business in the upcoming holiday season. Asked for his outlook, he replied: “I can certainly say that we’re expecting our holiday sales to be better than what you’ve seen year to date. They will certainly be positive. The inventory is going to be in a much better position than it’s been in over the last several quarters as we come into holiday.”
Additionally, he said: “You’re really seeing the consumer continue to be engaged with luxury. That core luxury consumer is still there, and we see it in our business, particularly in our designer concession businesses where we have the inventory.”
In his prepared statement, Metrick said the company is making “meaningful progress on our transformation strategy. We continue to advance our integration of Neiman Marcus Group, delivering synergies ahead of plan and reaching a major milestone with the launch of a unified merchandising platform for all of our luxury retail businesses. Operating from one platform, we are well-positioned to optimize inventory buys and unlock margin potential. We are already seeing cost savings and margin improvements in our results as we continue to drive forward on our integration — benefits that we expect will only build moving ahead.”
In other statistics released by the company, gross profit margin came in at 37.9 percent of revenues, 20 basis points lower than the prior-year period on a combined basis. “Higher full-price selling offset by minor shifts in sales mix, seasonal markdowns and promotional costs yielded margin results in the second quarter slightly below the prior year,” the company indicated.
Selling, general and administrative, or SG&A, expenses were 45.5 percent of revenues in the second quarter, and decreased by $66 million in the quarter through synergies attained by integrating operations of Saks and Neiman’s, as well as lower variable expenses on lower levels of revenue.