Saks Global, the luxury retail behemoth based in New York, is embarking on a significant restructuring process, aimed at refining its vendor relationships amid ongoing financial challenges. At a recent World Retail Congress in London, Executive Chairman Richard Baker announced that the company plans to cut ties with as many as 600 brands, a move that aligns with earlier statements revealing an intention to reduce its vendor base by approximately 25%.
This purge is partly a response to the challenges faced by the retailer in managing an unwieldy vendor matrix, which had ballooned to about 2,660 suppliers following the merger with Neiman Marcus last year. Baker stated, “We had to right-size our vendor matrix,” emphasising the need for clearer expectations from partnerships. The decision points to an acute understanding within the company of how a bloated vendor list can hinder operational efficiency and revenue flow.
Saks Global’s financial vulnerability has been a cause for concern, particularly as the company has grappled with a backlog of unpaid invoices. CEO Marc Metrick acknowledged the existence of an 18-month delay in payments, leading to a modified payment structure that mandates new orders be paid after 90 days and past-due accounts settled in 12 instalments starting July 2025. This approach, while intended to alleviate immediate financial pressures, has strained relationships with vendors further. Analysts have noted that many suppliers have been reluctant to fulfil orders due to these delayed payments, thereby disrupting inventory flows crucial to Saks’ operations.
The broader implications of Saks’ decision to extend payment terms resonate within the luxury retail sector, where timely payments are vital for smaller brands. The shift to a net-90 payment structure has drawn significant criticism, especially because many suppliers rely on immediate cash flow to sustain their businesses. As one industry observer commented, the prospect of waiting until July 2026 for complete payments could prove untenable for smaller suppliers dependent on regular income.
Adding to its challenges, Saks Global is also reducing its corporate workforce by about 5%, affecting various departments such as finance, legal, and operations. This downsizing reflects ongoing efforts to streamline operations and facilitate the integration process with Neiman Marcus, although staff at Saks-owned Bergdorf Goodman remains untouched by these layoffs.
In light of these operational changes and strained relationships, there is a pressing need for Saks Global to mend its ties with suppliers to avoid further exacerbating its financial difficulties. Experts in the sector argue that the luxury retailer’s strategy must evolve to establish more equitable and sustainable partnerships, lest it risk alienating the very brands that contribute to its prestige and market standing.
As Saks Global navigates this critical juncture, the retail giant finds itself at a crossroads: the need to reconcile financial prudence with the long-standing relationships that underpin its brand ethos is fraught with challenges. Achieving this balance will be crucial as the company moves forward in a competitive landscape increasingly defined by agility and reliability.
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Source: Noah Wire Services
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