Saks Global is considering leveraging its prime real estate portfolio as a bargaining tool with lenders as the company undergoes restructuring following its recent bankruptcy filing. The U.S. department store conglomerate, encompassing Saks Fifth Avenue, Bergdorf Goodman, and Neiman Marcus, filed for Chapter 11 bankruptcy protection, just a year after a debt-laden takeover aimed to create a luxury retail powerhouse. Saks Global secured a $1.75 billion financing package to maintain operations during the bankruptcy process, however, questions remain about the long-term viability of the company.
Strategies for survival may include the closure of underperforming retail locations. Real estate advisory firm JLL advises Saks on optimising their assets. JLL provides real estate and investment management services. Matt Weko from JLL suggests that Saks could pursue sale-leaseback options, selling assets to investors and leasing them back to maintain operations while boosting liquidity.
Saks Global operates approximately 125 stores, owning or controlling ground leases at 39 locations. These include prime locations such as Fifth Avenue in Manhattan and luxury corridors in Beverly Hills. Court filings indicate Saks Global’s intention to close approximately four non-operational stores. Experts estimate that selling these “dark stores” could command a discount of 40% to 50% compared to actively operating stores.
To ensure continuous inventory, the retailer is likely to prioritize payments to vendors to encourage brands to supply merchandise. Meanwhile, Macy’s, parent company of Bloomingdale’s, is also closing approximately 150 underperforming stores to manage costs and reinvest in higher-performing locations. This reflects broader challenges facing department stores in the evolving retail landscape, as competition increases from online retailers and luxury brands.
