After market speculation that it might seek bankruptcy protection, Saks Global Holdings has filed for Chapter 11 in the United States Bankruptcy Court for the Southern District of Texas, the company announced, adding that it has named Geoffroy van Raemdonck as its new CEO.
Saks pointed out that Van Raemdonck has taken steps to expand Saks Global’s senior leadership team, appointing industry veterans and former Neiman Marcus Group leaders, including Darcy Penick, who assumed the role of president, chief commercial officer, Saks Global, overseeing stores, marketing, buying, digital, analytics, and customer care. In addition, Saks has appointed Lana Todorovich chief of global brand partnerships.
Saks maintained that it has secured financing commitments of $1.75 billion, comprising $1.5 billion from an ad hoc group of senior secured bondholders and $240 million of incremental liquidity from the company’s asset-based lenders. The financing package will strengthen the company’s balance sheet and position it for a secure future, Saks asserted, while it continues to serve customers.
As part of the Chapter 11 process, Saks indicated that the company is evaluating operations to invest in where it has the greatest long-term potential and where luxury retail brands are best positioned for sustainable growth.
Upon court approval, $1 billion of debtor-in-possession financing from the Ad Hoc Group will provide liquidity to fund Saks Global’s operations and turnaround initiatives, according to the company. The Ad Hoc Group has committed to providing $500 million in financing upon Saks’ emergence from bankruptcy, planned for later this year.
In a research note, Pulse Ratings stated that it views the leadership change as a positive given van Raemdonck’s track record and noted that, after a period of speculation about a bankruptcy filing, Saks Global now has to focus on de-leveraging the balance sheet, shedding unproductive stores and improving operations as well as repairing vendor relationships.
“This is a defining moment for Saks Global, and the path ahead presents a meaningful opportunity to strengthen the foundation of our business and position it for the future,” said van Raemdonck in announcing the bankruptcy filing. “In close partnership with these newly appointed leaders and our colleagues across the organization, we will navigate this process together with a continued focus on serving our customers and luxury brands. I look forward to serving as CEO and continuing to transform the company so that Saks Global continues to play a central role in shaping the future of luxury retail.”
Saks Global operates the Saks Fifth Avenue, Neiman Marcus, Bergdorf Goodman and Saks Off 5th banners.
