Saks Global, the iconic and now bankrupt luxury retailer, may have to expand its customer base if it wants to survive in an increasingly volatile world of luxury retail.
Following its Chapter 11 bankruptcy filing on Tuesday, Saks will begin the months-long process to restructure its $3.4 billion in secured debt and emerge from bankruptcy. Surviving after that will be more challenging, as high fixed costs and tight margins limit retailers’ ability to make fundamental changes to the business. Many stores, including Forever 21 and Rite Aid, survived bankruptcy only to end up liquidating within a few years.
Avoiding that fate could mean attracting a slightly less wealthy customer, as unattractive as that may seem to the luxury store adored by the rich and famous.
“They need to turn the company into a high-margin healing machine,” said Eric Schiffer, president of the private investment firm Patriarch Organization, “and not a sprawling monument to nostalgia… The only way forward is brutal.”
Skeptics include Amazon.com, a major investor in the company. The e-commerce giant’s attorney, Caroline Reckler, said at a bankruptcy hearing Wednesday that she has “little to no confidence” that Saks can successfully emerge from bankruptcy.
Saks Global did not comment for this story.
Broader customer base
Department stores have been losing ground in retail for years, a situation that has been exacerbated recently by tariffs and inflation. “Department store margins have been terrible,” said Morningstar analyst David Swartz.
But Saks Global, which groups Saks, Neiman Marcus and Bergdorf Goodman under its umbrella, has been particularly hard hit. Revenue fell 13.6% in the fiscal year that ended in February 2025, according to court documents, adding that calendar year 2025 earnings before interest, taxes, depreciation and amortization are projected to be negative.
Saks has traditionally relied on a small portion of wealthy customers to boost profits. Its top 3% of customers, who spend more than $10,000 a year, generate about 40% of total annual sales, according to the company’s bankruptcy filing.
The solution starts with “the need to compete better for affluent customers, not just the wealthy,” said Steve Dennis, a retail consultant.
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However, expanding its consumer base has its own challenges, putting Saks in competition with stores like Bloomingdale’s and a growing number of luxury brands that operate their own stores, Swartz said.
It could also risk alienating ultra-loyal customers for whom exclusivity is the main draw, he added.
If expanding the customer base is part of Saks’ strategy, Tuesday’s bankruptcy filing didn’t suggest it. The company plans to liquidate the e-commerce component of Saks Off Fifth, the company’s only off-price brand, “unless a superior alternative emerges,” according to court documents.
Rethink stores
Saks’ 125 U.S. stores, most of them huge, fit uncomfortably with a business model based on big shopping and little foot traffic. Experts see an opportunity for Saks to downsize without significantly diminishing the scope of its business, merging Saks and Neiman Marcus under one roof.
“It’s an open question whether they still need to operate as separate stores,” said Patrick Collins, a bankruptcy attorney at Farrell Fritz, who is not involved in the case.
Still, Saks must also invest in the stores it maintains, Dennis said, in part through technological advances “like artificial intelligence, fulfillment automation and customer service systems.”
The company said in its bankruptcy filing that it has been using a unified merchandising platform since August, “which allows its teams to buy and sell inventory between Saks Fifth Avenue and Neiman Marcus to optimize inventory purchases.”
Saks missed an interest payment in December and had been having trouble paying suppliers, some of whom are also facing difficulties. Capri Holdings, for example, which has a $33.3 million claim against Saks, has seen a steady decline in revenue due to weak demand for its Michael Kors brand.
Additionally, cost cuts could be difficult to implement. Deglamorizing your stores or cutting staff might not go over well with customers. Saks’ decision in 2024 to cancel its traditional Christmas light show sparked disappointment.
“You can’t become TJ Maxx,” Swartz said, “because then you’re no longer luxury.”
With information from Reuters
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