What: Saks Global's $2.7 billion merger with Neiman Marcus faces significant challenges as sales decline and vendor payments falter, while competitors Bloomingdale's and Nordstrom gain market share.

Why it is important: The contrasting performance between Saks Global and its competitors highlights the risks of large-scale retail mergers, particularly when operational integration challenges impact core business functions.

The ambitious merger between Saks Fifth Avenue and Neiman Marcus is showing signs of strain, with sales at Saks falling 16% and Neiman Marcus declining 10% in the recent quarter. The $2.7 billion acquisition, intended to create a luxury powerhouse, has instead led to mounting challenges. The company faces significant vendor payment issues, with $275 million in overdue bills and new 90-day payment terms causing tension with suppliers. Customer service has deteriorated, with increasing complaints about damaged deliveries and delayed refunds. Meanwhile, competitors Bloomingdale's and Nordstrom have capitalised on these difficulties, both achieving sales growth exceeding 10% during the same period. The company's attempts to streamline operations through store closures and workforce reductions have further complicated its market position, while recent financing efforts highlight ongoing liquidity concerns. Despite partnerships with technology giants Amazon and Salesforce, the merged entity struggles to maintain its competitive edge in the luxury retail landscape.

IADS Notes: The transformation of Saks Global following its December 2024 merger has revealed significant challenges in luxury retail consolidation. In January 2025, the company launched ambitious technology partnerships with Amazon and Salesforce, aiming to enhance customer experience. However, by February 2025, the implementation of 90-day vendor payment terms and a 25% reduction in brand partnerships sparked industry-wide concern. March 2025 brought mounting customer complaints about service quality and delayed refunds, coinciding with significant cost-cutting measures. The company's market performance has steadily declined, with Saks experiencing a 16% sales drop in June 2025, while competitors Bloomingdale's and Nordstrom achieved double-digit growth.

Saks is ceding ground to luxury rivals