Saks Fifth Avenue Owner on Brink of Bankruptcy as Consumers Pull Back on Non-Essential Spending

Saks Global Enterprises, the storied owner of luxury icons Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman, is reportedly preparing to file for Chapter 11 bankruptcy as early as this Sunday. The dramatic move comes as the retail giant grapples with a crippling £1.7 billion ($2.2 billion) debt load and dwindling demand for high-end goods.

The company's crisis highlights a widening pullback in non-essential spending, with sources saying even affluent shoppers are tightening their wallets amid economic uncertainty. This shift in consumer behaviour is shaking the foundations of the traditional luxury market, leaving once-untouchable brands struggling to survive.

From Powerhouse Merger to Financial Distress

Saks Global's financial troubles stem from an ambitious 2024 merger when Hudson's Bay Co. combined the three luxury retailers into a single powerhouse. The deal, valued at about £2.1 billion ($2.8 billion), saddled the new entity with its massive debt.

'The added leverage has proven difficult to sustain in a structurally shrinking retail sector,' said Tim Hynes, global head of credit research at Debtwire, reflecting industry concerns over the aggressive assumptions behind the merger.

Despite hopes of annual savings and amplified market presence, Saks Global struggled to generate sufficient revenue, with sales falling sharply and many brands shifting to sell directly to consumers.

Mounting Debt and Missed Payments

By late 2025, the company's challenges had intensified. In December, Saks Global failed to make an interest payment of roughly $100 million on its bonds, a critical breach that heightened bankruptcy risk.

The missed payment underscored the strain of servicing its heavy debt load amid stagnant luxury spending. Saks had already raised financing, including a £470 million ($600 million) injection from bondholders in 2025, but this proved insufficient.

Saks Global is now reportedly in advanced talks with creditors about a £932 million ($1.25 billion) debtor-in-possession financing package to support its Chapter 11 process, enabling it to continue operations and pay overdue vendor bills.

Consumers Pulling Back on Discretionary Spending

Retail analysts point to a broader shift in consumer behaviour as a core reason for the company's plight. High-end shoppers are increasingly cautious as inflation and economic uncertainty persist.

Industry data shows foot traffic in traditional department stores declining, while online luxury boutiques and direct-to-consumer brands capture a growing market share. Saks' struggles are symptomatic of the broader luxury sector's fragility, as even well-heeled consumers prioritise essentials over discretionary purchases.

Leadership Shake-Up and Cost-Cutting

The financial stress has prompted leadership changes. CEO Marc Metrick stepped down after a decade, with Executive Chairman Richard Baker taking over to guide the business through the crisis.

Additionally, Saks Global has been forced to cut its store footprint and sell valuable real estate. Last year, the retailer closed underperforming locations and offloaded the land beneath its Beverly Hills Neiman Marcus store to generate cash, leading to hundreds of layoffs nationwide.

What Bankruptcy Could Mean

Filing for Chapter 11 bankruptcy allows a company to restructure while continuing to operate. Should Saks Global proceed, it will aim to renegotiate its debt and preserve its iconic brands.

However, industry watchers warn the process carries risks, including disruptions to vendor relationships and the potential devaluation of store credits and gift cards. For decades, Saks Fifth Avenue has occupied a central place in luxury culture, but its future now hinges on whether it can adapt to a new economic landscape.