From the outside, Saks Fifth Avenue — the century-old department store in Manhattan — is literally glowing, its façade decorated with thousands of glittering lights as part of its annual holiday display.
The shine, however, masks a retailer under pressure. On Friday, Saks named a new CEO, capping a tumultuous 12 months for the heavily leveraged department store owner. After months of restructurings, lawsuits, missed payments, and broken promises, Saks Global is now facing the possibility of a Chapter 11 bankruptcy.
What happens next could have consequences for customers. Brands — some of which haven’t been paid in full for over a year — have paused shipments to Saks’ stores, and creditors are awaiting news of its financial future.
In early December, Hilldun Corp., which acts as a sort of guarantor or insurer for brands, said it would no longer back shipments to Saks. The firm represents about 140 brands that sell to Saks — in the past, it’s worked with big names like Tommy Hilfiger, Marc Jacobs, and A.L.C. — and supplies the retailer with at least $500 million worth of product annually.
Hilldun’s delay was expected to be short-lived, but shipments were still on hold as 2025 came to a close amid growing reports that Saks Global, which also owns Bergdorf Goodman and Neiman Marcus, was considering a court-supervised reorganization.
“They must do something very quickly to rectify this situation in the market, or they will not have a spring season,” Gary Wassner, Hilldun’s CEO, told Business Insider. “Every order is on hold until Saks clarifies to the industry what they intend to do.”
Saks itself hasn’t negated the bankruptcy talk.
“Together with our key financial stakeholders, we are exploring all potential paths to secure a strong and stable future,” a spokesperson for Saks Global told Business Insider. “Importantly, opportunities in the luxury market remain strong, and Saks Global continues to play a distinct and enduring role within it.”
To succeed, Saks’ stores must not only resolve their debt issues, but continue to offer the assortment of luxury clothing, shoes, handbags, and beauty products that have long made its stores shopping paradises.
As things stand today, that’s at risk, Mark Cohen, the former CEO of Sears Canada, told Business Insider. “They aren’t going to have goods on the shelf, certainly not new goods. This is a house of cards — from a financial point of view, from a merchandising point of view, from a customer profile point of view.”
A match made in luxury hell
2025 was supposed to be a great year for Saks.
For more than a decade, the retailer, with its large physical footprint, had struggled to maintain its dominance as shopping patterns shifted, with customers turning to e-commerce or brand-owned outlets. It wasn’t alone: Nordstrom was treading water before it was taken private, and Macy’s has endured a drawn-out turnaround plan.
Its problems intensified following the pandemic, when inflation and economic uncertainty curbed discretionary spending. By 2023, it began to face challenges in paying vendors.
Then, at the end of 2024, Saks finalized its $2.7 billion acquisition of Neiman Marcus Group, forming a luxury behemoth backed by the technology of Salesforce and Amazon, which took stakes in the new company as part of the deal. The move was seen as a solution to the beleaguered retailer’s problems.
“It was touch-and-go up until the Neiman Marcus deal occurred,” Wassner said. “Everyone thought that would solve the cash flow problems.”
Edward Berthelot/Getty Images
But the execution was messy.
The deal was financed by $2.2 billion worth of junk bonds — debt that carries high interest rates — which S&P Global called “unsustainable.” It left the company strapped for cash, leading to a round of layoffs to start the year (multiple more would follow).
One of the first red flags for Saks arose on Valentine’s Day, when vendors, who Wassner estimates are owed hundreds of millions, received an I-love-you-not from then-Saks Global CEO Marc Metrick.
He told them that they’d have to wait. Saks would pay its overdue bills — in some cases, more than a year past due — in installments stretched over 12 months that wouldn’t begin until summer.
Vendors, some of whom were burned by similar communications prior to the 2019 bankruptcy of the iconic department store Barney’s, were left between a rock and a hard place.
One vendor, who said he is owed six figures, called the situation “agony.”
“We thought it was going to be a smoother transition and that this was going to be a global luxury masterpiece in the making,” the person said. “That just did not happen.”
Brands could withhold inventory shipments — which would risk ruining relationships with a core customer and put more strain on Saks’ balance sheet — or continue business as usual and hope for the best.
Those who chose the latter were further disappointed in July, when the payment schedule wasn’t met.
That month, Saks’ financial vulnerability was made clear when a nine-figure interest payment prompted a debt restructuring. A majority of bondholders agreed to provide cash in return for being moved up on the retailer’s cap table. Basically, meaning that if (or when) Saks files for bankruptcy, those bondholders get first dibs — likely before any vendors.
“I will say the biggest part of it has been the mental cruelty of this situation, waking up, not knowing what’s going to happen, trying to keep things going,” the vendor who spoke to Business Insider said.
A looming spring season
In the fall, things had dissolved to the point that several labels were withholding inventory.
S&P analysts wrote that Saks had a “less-than-adequate in-stock inventory position.” In October, the company lowered its earnings guidance for the year, blaming inventory challenges.
“You are going to ship to somebody you know you’re going to get paid from,” Tim Hynes, the global head of credit research at Debtwire, told Business Insider. “You will give Saks what’s left, you’re not going to give them the best.”
Mike Coppola/Getty Images for Saks Fifth Avenue
Some brands went even further, taking direct aim at Saks.
Skincare brand Sunday Riley said it threatened to sue if payments were not made, Retail Dive reported in August.
In October, Jovani Fashion, the dressmaker made famous by “Real Housewives of New York” star Luann de Lesseps, filed a lawsuit against Saks Global — a rare step in a relationship-driven industry. Jovani said Saks owed $295,651 for merchandise it accepted this year. (Saks has denied wrongdoing.)
By the end of the year, murmurs of a potential bankruptcy filing made headlines. They intensified on the last day of the year, when The Wall Street Journal reported that Saks had missed a nine-figure interest payment, according to people familiar with it.
“It’s time to solve the problems one way or another,” Wassner said.
Bankruptcy isn’t the only option. The company has billions of dollars in real estate that it can sell — it recently sold the land beneath its Beverly Hills location — and can close down unproductive stores, as it did with several Saks Off 5th locations and has floated doing with the Neiman Marcus in Dallas. The retailer’s store names still hold cultural cache, and deep-pocketed investors could step in to enhance the shopping experience.
Cohen, the former Sears exec, doesn’t expect Saks to close Bergdorf’s or that famous Fifth Avenue location anytime soon, but there’s still a long road ahead.
“They’re not getting merchandise freely. They’ve had enormous upheaval in management. The luxury business, generally speaking, is not robust at the moment, and we’re going into a year, 2026, which has all the makings of an honest-to- god recession,” he said. “Is there sunshine here? I don’t think so.”
Kaja Whitehouse contributed reporting to this article.
