Saks Global, the parent company of Saks Fifth Avenue and Neiman Marcus, has officially filed for bankruptcy protection.
After a turbulent year of rising debt, declining sales, and mounting operational difficulties, Saks has joined the ranks of high-profile retailers forced to seek Chapter 11 protection.
A deal gone wrong
Just over a year ago, Saks Global’s merger with Neiman Marcus was seen as a bold move to create a luxury retail juggernaut. The $2.7 billion deal was designed to consolidate two iconic department stores, combining assets and streamlining costs to recover from mounting supplier debts.
However, the merger failed to produce the financial turnaround Saks had hoped for. The company’s hopes of revitalizing the brand and achieving profitability were quickly dashed as inflation, economic uncertainty, and changing consumer behaviors hit hard.
By the end of 2025, Saks was struggling to pay its bills. According to Creditsafe data, Saks’ Days Beyond Terms (DBT) had been alarmingly high. DBT refers to the number of days late (i.e. past payment terms) that a company pays its bills.
Throughout 2025, the company’s DBT ranged from 30 to 41 days, more than three times the industry average of around 9 days. This meant that vendors were often waiting more than a month to receive payments for goods and services provided, putting significant strain on supplier relationships.
The debt spiral
Saks’ financial distress escalated as it failed to make a $100 million interest payment on its debt in December 2025, setting the stage for its bankruptcy filing. This missed payment was the tipping point for a company already struggling with an unsustainable debt load.
Saks had tried to restructure its debt earlier in 2025, raising $600 million to shore up its finances, but the company continued to bleed cash, with sales dropping 13% year-over-year in the second quarter of 2025.
Vendors, facing overdue payments and worsening cash flow issues, began to pull back. Some stopped shipments altogether, refusing to send goods to a retailer that had shown little ability to meet its financial obligations.
This disruption severely hindered Saks’ ability to restock its stores and generate revenue, creating a vicious cycle of debt, delays, and declining sales.
Supplier strain and delayed payments
One of the most telling signs of Saks’ liquidity problems was the company’s growing number of bills that fell into the delinquent category, with payments delayed by more than 91 days. Between July and December 2025, the proportion of overdue bills rapidly increased from 16.43% to 47.84%, signaling an acute cash flow crisis.
For a company that once had significant clout over its suppliers, Saks was now at the mercy of those same vendors, many of whom were hesitant to do business with a financially unstable partner.
This sharp increase highlights deepening cash flow issues, as the company’s ability to meet its financial obligations deteriorated rapidly. Such a large proportion of overdue bills indicates that Saks was not only delaying payments but was likely struggling to secure the necessary liquidity to cover its debts.
These persistent payment delays likely exacerbated the company’s financial troubles, contributing to the mounting pressure that led to its bankruptcy filing.
Economic headwinds and the luxury slump
Saks’ bankruptcy filing is a direct consequence of broader economic trends that have affected the luxury retail sector. Rising inflation, slowing consumer spending, and weakened demand for high-end goods have all contributed to the retailer’s financial difficulties.
The luxury market, which had been booming in the years following the pandemic, began to show signs of fatigue by 2024 Saks, which had heavily relied on its luxury offerings, was hit particularly hard.
Adding to the company’s woes was its substantial debt load, much of which was incurred in the wake of its Neiman Marcus acquisition. Saks had attempted to use this merger to secure its future, but the deal backfired as the company found itself unable to generate enough revenue to service its debt.
By the time it filed for bankruptcy in January 2026, the company had secured $1.75 billion in financing to help it navigate the reorganization process, but its future remained uncertain.
The bankruptcy filing also highlights the shifting dynamics of the retail industry. As department stores like Saks continue to struggle, many luxury brands have taken control of their own destinies by opening independent boutiques and distancing themselves from traditional retailers.
Giants like Louis Vuitton and Gucci have increasingly bypassed department stores, opting instead to sell directly to consumers in exclusive branded locations.
For Saks, this trend has made it harder to maintain its dominance. With suppliers exerting more control over pricing and distribution, Saks has been forced to adapt or risk falling behind. But with a weakened financial position and fewer options for restructuring, it remains unclear whether Saks can recover from this crisis.
Looking forward
As Saks Global navigates bankruptcy proceedings, the company faces a difficult road ahead. The retail giant is now evaluating its operational footprint and considering which stores to close as part of its restructuring.
Given the ongoing challenges in the luxury market and the company’s financial instability, it seems likely that Saks will emerge from bankruptcy as a smaller, more streamlined entity, potentially with fewer stores and a redefined business model.
While the company’s iconic brands of Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman still hold cultural cache, they are no longer enough to guarantee success in today’s retail environment.
Saks must now confront the harsh reality that its past strategies have failed, and it will need to rethink its approach to survive in a world where consumer spending habits are shifting and the retail landscape is evolving.
