Saks Global Ends eCommerce Partnership with Amazon
Bankrupt department store company Saks Global has officially terminated its eCommerce partnership with Amazon. This announcement was reported by Reuters on January 30. The relationship between the two companies faced challenges following Saks’ bankruptcy filing last month.
Saks Global’s Shift in Strategy
Initially, Saks had not indicated its intentions to reject the partnership under Chapter 11 bankruptcy protections. However, the luxury retailer is now closing the Saks on Amazon storefront to concentrate on more promising segments of its business. A source close to Saks revealed that the storefront witnessed limited participation from various brands.
- Saks aims to enhance traffic to its own website.
- The move aligns with its new business strategy focusing on full-price luxury sales.
Financial Implications and Off-Price Operations
Recent developments indicate that Saks is also preparing to scale down its off-price operations, which includes the majority of Saks Off 5th locations and all Neiman Marcus Last Call stores. This strategic pivot comes less than a year after Saks merged with Bergdorf Goodman and Neiman Marcus.
Saks expressed concerns in its bankruptcy filing, stating that the off-price division negatively impacted its overall financial health. Projections indicated that the Saks Off 5th sector, covering both physical and online stores, could incur losses of $139 million in fiscal year 2025.
Bankruptcy Details and Challenges with Amazon
On January 14, Saks declared bankruptcy, citing escalating debts and ongoing evaluations of its operational footprint. Amazon, which had invested $475 million in Saks Global at its inception in 2024, swiftly contested the bankruptcy filing. The eCommerce giant accused Saks of violating agreements regarding the sale of Saks products on its platform.
Amazon argued that its investment is now “presumptively worthless,” primarily due to the detrimental funding terms included in Saks’ $1.75 billion financing package.
The Broader Landscape for Retail
This downsizing at Saks reflects the larger structural issues affecting traditional department stores in today’s market. Analysts predict a potential decline in luxury retail locations, but they also suggest that this could create expansion opportunities for off-price and beauty retailers in the near future.
This strategic overhaul demonstrates how luxury retailers are adapting to changing consumer behavior and the increasing dominance of digital shopping experiences.
