Saks Global Enterprises Faces Chapter 11 Amid Luxury Spending Decline

Saks Global Enterprises, the owner of luxury retail icons like Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman, is preparing to file for Chapter 11 bankruptcy as early as March 10, 2024. The decision comes as the company grapples with a staggering debt of £1.7 billion ($2.2 billion) and a significant decline in demand for non-essential luxury goods. This situation marks a considerable shift in consumer spending patterns, with even affluent customers becoming more cautious amid ongoing economic uncertainty.

The financial turmoil for Saks Global traces back to a 2024 merger when Hudson’s Bay Co. combined the three retailers into a single entity. Valued at approximately £2.1 billion ($2.8 billion), the merger significantly increased the company’s debt burden. Tim Hynes, global head of credit research at Debtwire, commented, “The added leverage has proven difficult to sustain in a structurally shrinking retail sector,” highlighting the challenges facing the newly formed entity.

As consumer preferences shift, luxury brands have struggled to adapt. Saks Global has faced plummeting sales, compounded by a trend where many luxury brands have begun selling directly to consumers. By late 2025, these issues escalated, culminating in a missed interest payment of about $100 million on its bonds in December. This critical breach has heightened the risk of bankruptcy, underscoring the difficulties of servicing its substantial debt amid stagnant luxury spending.

To address its financial challenges, Saks Global secured a £470 million ($600 million) financing package from bondholders in 2025, but this was insufficient to stabilize operations. The company is now reportedly engaged in advanced discussions with creditors regarding a £932 million ($1.25 billion) debtor-in-possession financing package, which would facilitate its Chapter 11 proceedings. This financing aims to allow the company to continue operating while it negotiates its debts and manages overdue vendor payments.

Retail analysts attribute Saks Global’s plight to a broader shift in consumer behavior, where high-end shoppers are prioritizing essentials over discretionary spending due to persistent inflation and economic concerns. Industry data demonstrates a marked decline in foot traffic at traditional department stores, as online luxury boutiques and direct-to-consumer brands gain market share. Saks’ difficulties represent a microcosm of the luxury sector’s fragility, as even well-off consumers reevaluate their purchasing habits.

Leadership changes have also accompanied the financial strain. CEO Marc Metrick stepped down after a decade at the helm, with Executive Chairman Richard Baker taking charge to navigate the company through this crisis. In an effort to cut costs, Saks Global has reduced its store footprint and sold valuable real estate. Last year, the retailer closed underperforming locations and sold the land beneath its Beverly Hills Neiman Marcus store to raise capital, resulting in hundreds of layoffs across the company.

Filing for Chapter 11 bankruptcy would enable Saks Global to restructure while still operating. If the filing proceeds, the company aims to renegotiate its debt and preserve its prestigious brands. Nonetheless, industry observers caution that this process carries inherent risks, including potential disruptions to vendor relationships and the devaluation of store credits and gift cards.

For decades, Saks Fifth Avenue has held a prominent position in luxury retail. Its future now depends on the company’s ability to adapt to an evolving economic landscape and changing consumer expectations.