Saks-Neiman Marcus Merger Lures Amazon, Salesforce Into Luxury

The owner of Saks Fifth Avenue reached a deal to acquire rival Neiman Marcus for $2.65 billion, the companies announced Thursday. It will create a high-end retail giant at a low point for department stores and draw in two unorthodox investors in the form of Amazon and Salesforce.

From Beaver Pelts to Chanel Belts

Saks’ Canadian owner HBC, or Hudson’s Bay Company, was founded in 1670 on a Royal Charter from King Charles II and became a fur-trading powerhouse thanks to the felted beaver hats beloved by gentlemen of the 16th to mid-19th centuries. Over 350 years later, a Charles (III, in this case) is still king, but the prospects of economic domination — with beaver hats passé and HBC now a department-store operator — are gloomier.

Spending on luxury goods in the Americas fell 8% last year, according to Bain & Co. Meanwhile, department stores, which accounted for 14.1% of US retail sales in 1993, accounted for just 2.6% last year, according to GlobalData. HBC has struggled with its books and raised $340 million through real estate sales last year to catch up on payments to suppliers. The Saks-Neiman deal is, therefore, notable for its decidedly non-department store minority investors:

• It represents one of Amazon’s most notable physical retail investments since it bought Whole Foods outright in 2017. Amazon dipped its toe into the luxury market with online “Luxury Stores,” but without the full suite of top brands like Gucci and Burberry, where Saks could help open doors (of note: Amazon made several investments in cargo airlines before launching Prime Air).
• Salesforce is the more unusual investor — it’s publicized brand partnerships with Richemont, Louis Vuitton, Delvaux, and McLaren, but a direct stake in luxury retail is an outlier from its slew of investments in tech. The future is AI and haute couture?

A source told The Wall Street Journal that the combined Saks-Neiman subsidiary, to be called Saks Global, would have $10 billion in annual sales, a fraction of the $94 billion LVMH Moët Hennessy Louis Vuitton made last year.

Sharing the Wealth: Amazon founder Jeff Bezos plans to sell 25 million shares in the company, worth almost $5 billion. It’s the first time he’s sold shares since 2021, but Amazon stock is up 30% this year, and someone’s mid-life crisis wardrobe could use an upgrade — perhaps with a trip to Neiman Marcus.