Saks Splits At The Seams

Image Credit: iStock, Jennifer J Taylor

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Saks Fifth Avenue, the luxury department store popular with those who don Louis Vitton, is splitting itself in two.

Saks Fifth will separate its e-commerce business into a standalone company to be known as “Saks,” which will be run by Marc Metrick — currently the CEO of the entire ship.

Loosening the Purse Strings

As part of the transaction, venture capital firm Insight Partners will pony-up $500 million of fresh capital for a minority stake in, giving the business a valuation of $2 billion. That investment will be used to invest in faster shipping and better customer service.

Saks’ 40 brick-and-mortar stores will become a separate business that will remain controlled by current owner HBC.

Fear not, Saks cliente are not expected to notice meaningful changes to their shopping routine, and customers will be able to make returns and exchanges both in-store and online.

So Why Do It? Industry observers say the transaction appears more financial in nature than operational:

  • Metrick explained, “As a standalone company, we are well-positioned to make the appropriate investments to drive exponential growth and deliver the same exceptional experience online.”
  • HBC CEO said, “this transaction reinforces HBC’s ability to unlock significant value within our company’s assets.”
the takeaway

More broadly, Saks hopes to isolate growth in the luxury e-commerce space, with they say is poised for exponential growth. Farfetch, a British-Portuguese e-commerce site that sells luxury brands like Gucci and Fendi, saw its revenue climb 64% last year.