ners could be a gamechanger.  However, just a year after Saks Global’s $2.7 billion acquisition of Neiman Marcus and Bergdorf Goodman was finalized, the deal does not seem to have delivered the promised benefits.  According to Bloomberg Second Measure, which tracks debit and credit purchases, sales at Saks Fifth Avenue fell by 16 per cent year-on-year in the three months to June 30. During the same period, combined sales at Neiman Marcus and Bergdorf Goodman sank by 10 per cent.  Last week, S&P Global Ratings downgraded Saks Global’s credit rating from “CCC+” to “CC,” saying the luxury retailer’s $600 million financing transaction announced on June 27 was “tantamount to a default.” The company has pushed back against this characterization, with a spokesperson telling Retail Dive that “there will be no default under Saks Global’s existing agreement as a result of the transaction”.  “Importantly, this has no impact on our operations, and we remain confident in our ability to deliver for our stakeholders given this financing package, accelerated synergy realization, and improving inventory flows,” the Saks Global spokesperson said. However, multiple retail experts say the company still faces significant challenges, including competition from more accessibly-priced department stores like Bloomingdale’s and international entrants like Printemps.  What went wrong with Saks Global  As Global Data’s MD Neil Saunders explained to Inside Retail, Saks and Neiman Marcus have been impacted by two unfavorable trends.  “First, the slowdown and pullback in the luxury market. Second, the continued deterioration of department stores. This is a double whammy that they are ill-equipped to deal with,” Saunders said. Saunders noted that “Saks Global is in a weak financial position”. “It borrowed heavily to fund the acquisition of Neiman Marcus, and it now faces something of a cash crunch. That’s worrying for any business, but for one with high overheads and in a segment of retail that’s in decline, it is particularly troublesome,” he said. In a post, S&P Global Ratings alluded to Saks Global’s deterioration in its operating performance and liquidity challenges due to disruption in its inventory flow, a decline in the availability under its asset-based lending facility due to overdue payments, borrowing base constraints and seasonal inventory building, as well as a free operating cash flow deficit of $517 million in 2024. “We believe the company’s market position will weaken as competitors with greater financial capacity expand their business operations,” S&P said in the post. What Saks Global’s competitors are getting right  One reason that Bloomingdale’s and Nordstrom are in a better position to perform than Saks Global is that “they both operate in the accessible luxury market, which is more robust than the higher end of the market,” Saunders said. CI&T’s global director of retail strategy Melissa Minkow noted that Bloomingdale’s and Nordstrom have invested in innovating their digital and brick-and-mortar experience in a way that Saks Global has not.  “They’re highly customer-centric with their channel strategies and work hard to keep their assortment of brands uber relevant,” Minkow said. Marie Driscoll, a chartered financial analyst and a professor at Parsons, The New School and the Fashion Institute of Technology, added, “Nordstrom and Bloomingdale’s have upped their game with new brands, installations, events and services designed to entice.” Both Driscoll and Minkow highlighted Saks Global’s stale assortment of retail vendors, many of whom are frustrated by the company’s failure to pay past invoices.  “Department stores that sell brands available elsewhere – other department stores, brand DTC, online marketplaces – require a differentiated fashion point of view and a relevant curated assortment of emerging luxury brands as well as established global brands to keep luxury shoppers interested,” Driscoll told Inside Retail. “Delayed vendor payments at Saks and Neiman Marcus make this fundamental increasingly difficult to execute.” How Saks Global has created a vague brand image  Driscoll also observed that Saks Global has undercut its status as a luxury retailer by partnering with less premium retail partners.  “Layer on the ubiquity Saks has created via its presence on Amazon and its plan for the Saks men’s private brand debuting at Costco, which we see undermining the luxury positioning of Saks and thus likely weakening long-term strategic positioning,” she added. Ultimately, to pull itself out of the red and into a place of profitability, these retail experts say that Saks Global needs to focus on getting its finances in check and allocate resources towards innovation and a clear brand story.  Saunders suggested that Saks Global needs to reduce costs, sell off some real estate to pay down its debt and revive trading in order to generate strong cashflow and profits to work properly. “If Saks doesn’t have the finances to invest in innovation like its competitors, the future will certainly be a struggle,” Minkow warned. Furthermore, Driscoll noted that Saks Global must focus on local relevancy, much like French retailer Printemps has done with its New York location, to draw in consumers. “The entrance of Printemps New York brings a heightened focus on hospitality and experiential retail in a luxe setting where discovery is paramount,” she said.  “Department stores and luxury department stores must be locally relevant to be successful. By excelling in local relevancy, a luxury department store becomes a must-visit for tourists as well who seek curation, a fashion point of view, inspiration, taste and style,” Driscoll concluded.