Saks Global Enterprises announced it secured $600 million in financing commitments from a majority of its existing bondholders as the upscale retail operator looks to reset in a luxury market showing signs of softening.
The Saks Global deal comes after the bankruptcy of Hudson’s Bay Co. Saks Global arose during a spin-off of Hudson’s Bay properties that resulted in the new company’s formation. The transaction includes a $400 million first-in, last-out asset-based credit facility, with $300 million funded and an additional $100 million coming upon completion of a bond exchange, Saks Global stated. The transaction also includes $200 million in additional commitments subject to the satisfaction of certain conditions, Saks Global maintained, adding a majority of bondholders have committed to participate in the exchange. Saks Global is entering into the bond holder transaction in lieu of the financing commitments it announced last month with SLR Credit Solutions.
In announcing the transaction, Marc Metrick, Saks Global Operating Group CEO, said, “Today’s announcement reflects the outcome of productive engagement with our bondholders and their continued confidence in our business and strategic direction. This comprehensive financing package meaningfully enhances our liquidity and strengthens our balance sheet. Coupled with the early realization of synergies and improving inventory position, we are primed to execute on our transformation strategy, invest in key growth initiatives and reinforce our leadership as the world’s largest multi-brand luxury retailer.”
The Saks Global financial development comes as a Bain & Co. report concludes the global luxury sector is confronting its most far-reaching disruptions and biggest potential setbacks in at least 15 years as mounting economic turbulence, and complex social and cultural shifts weigh in. The downturn comes despite a relatively upbeat end to 2024 for the luxury sector, bolstered by a double-digit rise in tax-free spending in Europe, as well as decreased market volatility in the United States late last year.
Luxury brands are contending with weakening sentiment regarding the sector among younger consumers, notably GenZers, Bain reported. In addition, distribution channels, especially physical and digital multi-brand outlets, are grappling with financial pressures as industry players try to stabilize debt and preserve liquidity including through restructuring. At the same time, the industry’s innovation engine appears to be losing momentum and appeal, while the creative leadership vital to the sector is under strain and rotating across brands, Bain observed. This all comes as supply chains are experiencing growing stress as geopolitical challenges grow and regulatory oversight increases.
Bain further asserted forces disruptive to the luxury sector are converging as headwinds. The Euro 1.5 trillion, or $1.77 trillion, industry faces its first slowdown since the global financial crisis of 2008/2009, excluding the temporary shock of the COVID-19 pandemic. For the personal luxury goods segment, a potent post-pandemic rebound saw the market reach Euro 369 billion, or $435 billion in 2023. However, the industry slipped last year to Euro 364 billion, or $429 billion, down 1% at current exchange rates and flat when adjusted for currency movements In the first quarter of 2025, expectations are for a further slide of between 1% and 3% at current exchange rates.
