Saks Global plans to remove 500 to 600 brands from its portfolio to focus on a smaller mix of ‘controlled brands’ with a larger margin.
Saks executive chairman Richard Baker shared about the strategy during the World Retail Congress on Wednesday.
According to the chairman, the company runs a business with more than $9 billion in annual gross merchandise value, representing around 60 per cent of luxury fashion sales in the US.
“We had to rightsize our vendor matrix. When we put all these companies together, it turned out we had 2660 vendors,” he said.
“Too many and [the] terms of many of these vendors weren’t right. We had to reset our expectations for what vendor relationships would look like.”
Baker said that Saks Global will work with “controlled brands” via partnerships similar to the 50/50 joint venture it has with Authentic Brand Group. The two companies launched Authentic Luxury Group last October as “an incubator for brand growth through new strategic licensing agreements and distribution channels across fashion, retail, digital, hospitality, real estate, art and travel”.
“As part of our transaction, we have over $600 million a year in synergy. We all know how hard we have to work to make an additional $600 million a year, and that’s what we’re first and most important was getting that figured out at Saks Global,” Baker said.
“If I can bring our mix to 20 per cent controlled brands with a larger margin and an ownership position with Salter, that’s a tremendous win for us, and a much more conservative and appropriate cash flow,” he continued.
Jamie Salter, CEO of Authentic Brands, also took part in the panel alongside Baker.
“You take 20 per cent of $9 billion, that’s $1.8 billion. He’s gonna make 25 per cent more on that product. That’s almost a $400 million change. That’s why this relationship is so critical,” Salter commented.
Last month, Saks Global announced that its luxury department store chain Saks Fifth Avenue would join Amazon’s marketplace to offer a curated selection of merchandise from brands such as Dolce & Gabbana, Balmain, Etro, Giambattista Valli, Erdem, Rosetta Getty, Chantecaille, and La Prairie.
