It’s a dicey situation.
Saks Global executives, while continuing to manage their newly formed luxury retail empire through tough times, are working overtime attempting to mollify vendor concerns and frustrations over Saks’ revised payment terms.
Vendors, particularly smaller ones, are uncertain about future dealings with Saks Global, which on Feb. 14 announced that vendors will be paid 90 days after receipt of merchandise, and paid for unpaid bills beginning July in 12 monthly installments. Some even believe the longevity of their business is at risk as a consequence. The entire Saks Global retail portfolio — Neiman Marcus, Bergdorf Goodman and Saks Fifth Avenue — is now on the same payment terms.
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Saks also disclosed it’s cutting its vendor count by 25 percent, including those voluntarily leaving and those Saks cuts from the matrix. Some vendors saying goodbye have wondered whether they will be paid for past shipments. But Saks Global in a statement told WWD, “Saks Global is committed to fulfilling all of our obligations to both current and past partners.”
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Saks also told WWD that it is “actively engaging in conversations with our brand partners, so that we can build lasting relationships that are beneficial for both us and them. Saks Global is well positioned to be a strong partner to brands over the long term, and we look forward to bringing stability to the U.S. luxury multi-brand industry.”
Last Thursday morning, Marc Metrick, chairman and chief executive officer of Saks Global, held a one-hour online meeting with about 50 members of the Council of Fashion Designers of America to address the concerns, among them, the impact of the extended payment schedule on wholesalers and marketplace vendors and emerging chargebacks.
The situation with Saks compounds what vendors have been worried about for some time — the rising costs of borrowing for operations and conducting business; upcoming tariffs squeezing margins, and the possibility that the U.S. economy plunges into recession, impacting already soft consumer discretionary spending.
Then there’s the state of the Saks Fifth Avenue business, which last year was not good. WWD has learned that Saks Fifth Avenue sales were down 14 percent in the fourth quarter, and down 11 percent for all of 2024. Part of the problem was significantly lower inventories.
But Saks Global officials are adamant that the $2.7 billion Saks takeover of the Neiman Marcus Group, finalized last December, will strengthen the retail banners and increase liquidity. The company is currently burning through cash, but working to cut $500 million in annual costs, and plans a hookup with Amazon, the details to be revealed at a later date.
To close the Neiman’s deal, Saks Global, led by executive chairman Richard Baker, pulled together some creative financing involving Amazon, as well as Salesforce, G-III and Authentic Brands Group. Saks also secured a $2.2 billion bond.
Some vendors have an inside line on the business. G-III Apparel Group — parent to Donna Karan, DKNY, Karl Lagerfeld and Vilebrequin — also invested in Saks Global as it bought Neiman’s. G-III “has a confidence level in the business acumen of Marc Metrick and Richard Baker,” said Morris Goldfarb, G-III chairman and CEO. “We’re close to it. We have visibility on what we need to have visibility on. We don’t have a decision-making responsibility investment. It’s relatively small, certainly insignificant to Saks and for us it’s an investment that’s manageable, gives us advantages and we believe is important for the future of this company.”
Does that investment translate into prominent space for Donna Karan or other G-III brands at Saks Global? “We have to earn that space,” Goldfarb said. “Do we get the buyers and merchants to visit and view it? Yes. We’d be disappointed if we didn’t have maybe a preferred seat in the theater showing our wares, but (there’s) no influence on how it’s bought…They have good product. They have good vendors, and there’s got to be greater clarity as to how their vendors are treated,” Goldfarb said. “I believe that there’s a desire in the management and the equity holders of Saks to make the pain as minimal as possible for their vendor base so they can sustain a creative business and support what Saks needs.”
Luca Lisandroni, CEO of Brunello Cucinelli, told analysts on a conference call that he met with Saks management for lunch and sees “no big challenges…The truth is that at times, they want to maybe review and re-discuss payment terms and so on and so forth,” Lisandroni said. “But frankly, there’s no problem there. And the projects they are embarking on are really relevant.”
Jeff Abrams, founder and CEO of Rails, a women’s contemporary brand, said: “There are a lot of moving parts with this merger and shipping them is a bit of a challenge right now [for everyone]. Pending your status as a brand and where you are financially, you have to weigh your relationship and connection to the customer with your current financial situation.
“For Rails, Saks and Neiman’s have been longtime partners and have helped us connect with a lot of contemporary shoppers,” Abrams said. “We’re trying to figure out, through this transition period, how can we be good partners to Saks and Neiman’s. Can we continue to grow our business and look at this as an opportunity to actually gain market share?”
Rails works with a factor, Hilldun, and upcoming shipments will be factored. “We would like to continue shipping to both… We are carrying a fair amount of receivables,” Abrams said, though he added, “Most accounts always have some level of aging balance.
“We’ve tried to be thoughtful to continue to allow (Saks Global) to have newness without getting too much open balance,” Abrams said. “Our hope is that the 90-day payment period does not become a permanent situation. That would be very hard for a lot of brands.”
He said Rails is “not shipping blindly. We’re talking to Saks and Neiman’s and figuring out if we can get paid for the older invoices so we can continue to ship. Are there ways we can reduce some of the risks of future shipments, and make sure we’re on a good cadence? We’re trying to be thoughtful but not lose our momentum.”
One chief financial officer, who requested anonymity, described Saks’ longer payment terms as “robbing Peter to pay Paul” since the setup helps Saks Global build a cash reserve that will help cover its back bills. That, in a sense, has vendors financing payments back to themselves.
There are arguments that while the sector has evolved significantly, the way vendors get paid hasn’t. Saks often sits on merchandise for weeks and weeks before it gets sold, leaving the retailer holding the financial bag for a long time. But that doesn’t fit in all cases, as in when brands drop-ship e-commerce orders placed on Saks.
“It’s really, really bad when you don’t get paid for drop-shipping,” said the CFO, whose company is owed money from Saks. “I’m not planning on that money. If we get it, it’s great.”
About three years ago, Alison Diboll launched Gabriella Rossetti, a New York-based, sustainable, on-demand manufacturer of plus-size women’s fashions ranging in price from $189 for a sleeveless silk shell to $1,100 coats. When an online order comes in, the material for the garment is cut and sewn and quickly prepared for shipment to the customer, thereby avoiding excess inventory, she said.
Diboll, the CEO, characterized her collection as “attainable luxury” and said her products are listed on GabriellaRossetti.com, Nordstrom.com, Bloomingdales.com, and Saks.com.
Diboll said difficulties getting paid by Saks began in the summer of 2023 after launching on Saks.com in March 2023. At one point, she hadn’t been paid for nine months until late 2024 after she went “directly to the CEO,” she said. “Otherwise I do not believe we would have been paid at all since June.
“When we first onboarded with Saks, we were misclassified on their merchant side alongside wholesale brands,” leading to financial burdens. “However, we are not a wholesale brand. We operate as consignment drop-ship,” or marketplace model. “This has created financial and operational challenges that should not exist for a business structured like ours.”
She said that for marketplace brands there’s a different onboarding process at Saks than a wholesale brand, and marketplace vendors get paid digitally, which is faster and more efficient than cutting and sending out checks to vendors wholesaling to Saks, though Saks said all payments will be made through wire/ACH at the earliest date commercially possible, thereby “taking significant friction out of our processes.” Diboll said she’s been trying to transition onto Saks’ marketplace platform.
She recalled hearing Saks executives on a conference call with vendors in August 2024 give assurances that at the close of the Saks deal to buy Neiman Marcus, which happened last December, Saks would return to normal operations. “If anything, the situation is getting worse,” Diboll claimed. She said she hasn’t received a payment since last November.
She also claimed that Saks has not been shipping back customer returns. “This is equally damaging as not being paid. As a sustainable manufacturer, we want to resell things that haven’t been worn.” Months ago, she was told Saks was conducting a warehouse inventory so they couldn’t ship anything back, though there was also speculation Saks held back goods to increase its valuation to help get financing for the Neiman’s deal.
“We have really reduced the amount of product that we will sell through Saks, which is what many brands have done,” Diboll said. “Saks is absolutely creating hardship for us and many other brands, but because of our on-demand, sustainable model, we are able to be more flexible. There’s less up-front capital required,” compared to brands engaged in wholesaling. “And we are diversifying our sales channels,” Diboll added. “We have to protect our financial interests from a company that wasn’t paying or shipping back our returns. We are going to be OK.”
Diboll said she is raising seed money to grow her business, and that the Saks situation doesn’t make it any easier. “There are some investor concerns, but the good news is that more sophisticated investors understand that reduced sales are a temporary situation…I see more brands reaching out to one another to share tactics. I’ve been doing that myself. Shared knowledge is power. I would love brands to help each other move through this.”
Asked why she sticks with Saks, Diboll said, “It’s because of our customer — a plus-size woman who has been largely marginalized by the fashion industry.” But Saks, she acknowledged, “has cultivated a strong plus-size customer base.”
Other vendors stick with Saks Global for other reasons. Selling at Saks, Neiman’s or Bergdorf’s is good exposure for a brand and adds prestige, and potentially significant sales volume. There are also few alternatives in the U.S. There’s Bloomingdale’s, Nordstrom, and some high-end independent fashion stores across the country, which could capitalize on the strain in vendor-Saks Global relations. Many brands can’t afford to open their own stores or ship abroad.
One European luxury designer said: “There’s a feeling of disappointment at how very little respect Saks has for their vendors. We are getting paid — but it’s taking four to six months which makes shipping new orders tricky… Our liabilities have increased now that Neiman’s is part of Saks Global, and we cannot get insurance for either one.”
One executive at a designer company selling all three retailers said more than $1 million is owed on an ongoing basis. “Managing cash has become our full-time job unfortunately. It’s about constantly calling, negotiating, and waiting for payments. We finally signed on with Hilldun, which partially approved Saks with a hefty surcharge,” the executive said. “The industry is really running the risk of turning the luxury fashion ecosystem into one where only big brands with deep pockets can thrive. Independent designers are the ones that bring innovation and diversity to our industry. If they’re being squeezed, they may hesitate to take risks to focus on sell-throughs.”
One New York designer that does business with Saks, Neiman’s and Bergdorf’s is trying to focus more on markets that are “robust, growing and paying on time” in Asia and the Middle East.
Another designer said his company continues to sell to all three retailers but “we are very scared about what could potentially happen.” Currently, his company is owed 700,000 euros and has orders for pre-fall and fall merchandise worth another 500,000 euros, he said. The orders will require pre-financing, he said. “By some time in July, we will be owed 1.2 million” euros.
The designer said the last payment received from Saks was the end of December. It was six months old. Slow payments from Saks started about 20 months ago, he said. Neiman Marcus, however, was paying within 30 days until the end of last year.
He said planning business based on the new Saks Global payment schedule makes it tough to sustain his business. The company has to take out bank loans at 7 percent interest. “We have no other choice. We don’t like the situation at all. We need the quantities [they order] for our production minimums. It’s a very difficult situation.”
Already, the financial strain of the situation could be too much for some vendors. “The bigger businesses can have the privilege to wait,” said one contemporary vendor. “Factors need to support the smaller brands. The factor should step up and offer relief to smaller brands.”
The CEO of a men’s brand selling Neiman’s and Saks said Saks “has made some effort to pay, but a ridiculously low amount versus what they owe us. It’s nowhere near where it should be.” He felt the new 90-day payment terms “was a real shocker,” he said.
Nevertheless, he continues to ship to both nameplates because they remain important to his business. “And vendors who chose not to ship have a hard time getting back in” to the retailers, he said.
Another menswear CEO said, “We sell to both Saks and Neiman’s. Neiman’s is actually the bigger business for us and we are very concerned about the payment terms but we have received assurances that we will be paid on time. We have been given a schedule and are receiving payments on the schedule they provided. We speak to each other often. We are thinking long term, and when this hurdle is over we want to be positioned for growth with Saks Global.”
Ronny Kobo, a contemporary designer, said: “I trust very much in the merger that Saks Global has built. I think that Saks Global will bring a lot of innovative changes in the way we do business in the major retail space. I’m excited to see what the future holds. I’m optimistic. I feel that change in the retail space has to happen because we have seen so many majors go out of business the past 10 years.”
She feels this merger will be a success. “There’s too much invested in it. My take is not to kiss my business farewell, but change is needed to have an industry that works right.”
While she wouldn’t comment on whether Saks has paid her, she did say she’s been in worse situations, citing Intermix, which closed many of its stores, and Barneys New York, which liquidated. She said they never stated a date when late payments would resume.
Neil Brown, who cofounded Amsale with his late wife Amsale Aberra, said, “Saks has been a great partner. We’re fortunate to have had a multidecade relationship with both Saks and Neiman Marcus. We’re very fortunate to be working with Hilldun, which is a very sophisticated financial partner that handles our receivables. That has helped us through this challenging time. In a way, we see the success of the Saks and Neiman’s merger as important to the industry as a whole. We have tremendous empathy for the challenges that Marc and his team are facing.”
As for the current timing of the payments, Brown said, “We’re happy that Hilldun is helping us manage the timing of the payments so that we can keep our orders flowing.”
With contributions from Jean Palmieri, Samantha Conti, Tianwei Zhang and Luisa Zargani