Saks Global's Downfall: A Case Study in Overleveraged Retail Expansion

The collapse of Saks Global, the parent company of Saks Fifth Avenue, offers a cautionary tale for investors and executives in the luxury retail sector. Driven by a $2.65 billion acquisition of Neiman Marcus in 2024, Saks Global's aggressive debt-fueled expansion strategy has left the company with $4.7 billion in debt as of 2025, triggering a cascade of operational and financial crises. This case study examines how overleveraged M&A, combined with a broader decline in the luxury retail sector, has pushed Saks Global toward insolvency-and what this means for the future of high-end retail.

The Acquisition and Debt Accumulation

Saks Global's 2024 acquisition of Neiman Marcus was framed as a strategic move to consolidate luxury retail assets and create a dominant player in the sector. However, the deal was financed through a combination of $2.2 billion in senior secured notes and an asset-based credit facility, with additional support from investors like Amazon and Salesforce according to financial reports. By 2025, the company's debt burden had grown to $4.7 billion, forcing it to initiate a complex debt restructuring that included $600 million in new funding from creditors. Despite these measures, Saks Global missed a $100 million interest payment in late 2025, signaling its proximity to bankruptcy.

The financial strain is evident in the company's EBITDA performance. While Saks Global projected $707 million in EBITDA for 2025 post-acquisition, the first quarter of 2025 saw EBITDA at just $13 million-a stark contrast to the negative $1 million recorded in the same period in 2024 (excluding Neiman Marcus) according to industry analysis. This volatility underscores the challenges of integrating two struggling luxury brands under a single, debt-laden entity.

A Declining Luxury Retail Sector

Saks Global's struggles are not isolated but reflect broader trends in the luxury retail sector. From 2020 to 2025, the sector experienced a slowdown in growth, with global sales of personal luxury goods projected to decline by 2–5% in 2025. This decline is attributed to weakened consumer demand in key markets like China and the United States, geopolitical tensions, and the lingering effects of inflation and rising tariffs as McKinsey reports.

Consumer behavior has also shifted. The rise of "quiet luxury"-understated, high-quality craftsmanship over overt branding-has reduced demand for seasonal or heavily branded items according to industry insights. Meanwhile, price transparency and sustainability have become critical factors for discerning buyers, forcing brands to justify premium pricing through traceable supply chains and ethical production as research indicates. Saks Global, however, has struggled to adapt. Its inventory shortages and delayed vendor payments have eroded customer trust and strained relationships with suppliers as Retail Dive reports.

Operational and Strategic Missteps

The Neiman Marcus acquisition, intended to create synergies, instead exacerbated Saks Global's operational challenges. By mid-2025, sales at Saks Fifth Avenue and Neiman Marcus had declined by 16% and 10% year-over-year, respectively, while competitors like Nordstrom and Bloomingdale's saw sales rise by over 10% during the same period according to Business of Fashion. The company's reliance on asset sales-such as its Beverly Hills property and a minority stake in Bergdorf Goodman-highlights its desperate attempt to reduce debt as financial reports show.

Internally, Saks Global has faced a creativity crisis and operational inefficiencies. Vendors like Cellar Door Preserves have reported months of unpaid invoices, leading to severed partnerships as The New York Times reports. These issues have compounded the company's inability to maintain inventory levels, further alienating customers during critical sales periods like the 2025 holiday season according to industry analysis.

Broader Industry Risks and Lessons

Saks Global's case is emblematic of a larger trend in the luxury sector: the risks of overleveraged M&A. Kering, the parent company of Gucci, provides a parallel example. After acquiring Creed and a 30% stake in Valentino, Kering's net debt ballooned to €10.5 billion by 2024-half its market value according to fashion industry reports. Analysts warn that such debt levels increase the risk of credit rating downgrades and weaken competitive positioning against debt-free rivals like LVMH and Hermès as industry analysis shows.

The broader lesson is clear: in an industry where brand reputation and supplier relationships are paramount, financial instability can rapidly erode value. As noted by McKinsey, the luxury sector must prioritize "strategic resets" and restore product excellence to align with evolving consumer expectations according to McKinsey insights. For Saks Global, this would require not only debt restructuring but a fundamental rethinking of its operational and creative strategies.

Conclusion

Saks Global's downfall underscores the perils of aggressive debt-fueled expansion in a declining market. While the acquisition of Neiman Marcus was intended to create a luxury retail powerhouse, it instead left the company with unsustainable debt and operational chaos. As the luxury sector grapples with shifting consumer preferences and macroeconomic headwinds, the Saks Global case serves as a stark reminder of the importance of financial prudence, strategic alignment, and adaptability in high-end retail.