Amazon Challenges Saks, Opposes Bankruptcy Plan
The eCommerce giant Amazon has raised concerns regarding the financial stability of Saks, following a recent bankruptcy declaration. In a court filing, Amazon accused Saks of violating an agreement related to the sale of Saks products on its platform.
Amazon’s Investment in Saks Global
Amazon had invested $475 million in Saks Global, a company formed from the merger of Saks and Neiman Marcus, back in 2024. However, this investment is now considered “presumptively worthless” according to the filing. Amazon based its investment on Saks’ commitment to sell its products on Amazon’s platform, which included a referral fee and an agreement for Saks to make at least $900 million in payments over eight years.
Bankruptcy and Financial Concerns
On January 14, Saks declared bankruptcy and announced it had secured $1.75 billion in funding. However, Amazon challenges the terms of this financing, believing it places undue obligations on the retailer and poses risks to creditors.
- Amazon claims Saks has consistently failed to meet financial targets.
- The retailer reportedly burned through hundreds of millions of dollars within a year.
- Unpaid invoices to retail partners have accumulated to hundreds of millions as well.
Saks’ Financial Troubles
During a recent testimony, Saks advisers indicated the retailer might face liquidation without immediate financial support. Mark Weinsten, Saks’ restructuring officer, warned that without funding access, the company would be “dead in the water.”
Investment Strategy and Market Impact
In an effort to revitalize its operations, Saks raised billions in 2024 to support its turnaround strategy, including acquiring NMG, the parent company of Neiman Marcus and Bergdorf Goodman. This initiative aimed to create a “technology-powered luxury retail company” with backing from investors like Amazon.
Investors have expressed concerns about the increasing debt load as Saks faced numerous complaints regarding missed payments. Many suppliers have ceased shipments due to these financial issues. In discussing the relationship between Amazon and Saks, industry leaders noted the potential implications for both luxury retail brands amidst changing market dynamics.
Analysts have begun to speculate whether Amazon can leverage this partnership effectively or if it might withdraw, particularly given the significant demographic of affluent consumers who are Prime members and could become potential customers for both companies.
