A luxury retailer is making its own high-end purchase: Saks Fifth Avenue's parent company is buying Neiman Marcus for $2.65 billion, in a merger that would create a dominant upscale department store in the U.S.
HBC, the owner of Saks and the Canadian chain Hudson's Bay, has agreed to buy Neiman Marcus, which also owns Bergdorf Goodman. Amazon will take a stake in the new combined company, slated to provide technology and logistics as part of the deal. Another tech partner, Salesforce, will also be a minority shareholder. The head of Saks.com, Marc Metrick, will run the new combined firm Saks Global.
Saks and Neiman Marcus have long weighed the idea of combining forces to confront a changing market. Neiman was the first department store to topple into bankruptcy at the start of the pandemic, later emerging under new investment-firm owners.
Both chains are facing pressure, particularly from luxury brands that are increasingly flexing their muscles over department stores, connecting with shoppers directly and opening their own retail locations.
“For years, many in the industry have anticipated this transaction. ... This is an exciting time in luxury retail, with technological advancements creating new opportunities to redefine the customer experience," HBC's CEO Richard Baker said in a statement, touting a plan to use artificial intelligence to create personalized shopping experiences online and in stores.
Luxury shopping went gangbusters as pandemic-weary shoppers splurged on upscale handbags, outfits and skin care. But the shopping spree has now cooled. Those purchases now are often done online.
Rival Macy's, the owner of Bloomingdale's, has been closing stores and shifting its focus more to its luxury business, facing big pressure from activist investors to turn around its slumping business. Meanwhile, the family that owns Nordstrom is trying to take the company private.
The merger is likely to face tough scrutiny from federal regulators, who've recently sued to block several high-profile deals between market leaders. That includes the mergers of top two grocery chains, Kroger and Albertsons, as well as another luxury merger: Tapestry, which owns Coach and Kate Spade brands, wants to buy Capri Holdings, which owns the Versace and Michael Kors brand.
Saks Fifth Avenue has 39 stores across North America plus numerous off-price stores called Saks Off 5th. Neiman Marcus has 36 stores plus two Bergdorf Goodman locations.
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