Major luxury brands resume deliveries to SAKS Global despite ongoing bankruptcy

Saks Global Enterprises said hundreds of brands, including Burberry and those owned by luxury powerhouses LVMH and Kering, have either resumed or continued shipping to the troubled retailer as it tries to emerge from bankruptcy. The company, which includes Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodmanstores, is set to receive around $1.2 billion in merchandise over the next few months, chief executive officer Geoffroy van Raemdonck said in an interview with Bloomberg News.

Those goods are coming from more than 380 brands, some of which have started shipping again after pausing while the company hurtled toward bankruptcy. That’s three times the number of brands that were shipping in January, the CEO said.  This marks an important step forward for the department-store operator’s turnaround- but it’s just one of many hurdles as Saks Global attempts to reclaim its cachet as a high-end shopping destination. “The brands resumed faster than I thought,” said van Raemdonck, who assumed the helm of the company last month after it filed for Chapter 11.

The $1.2 billion worth of merchandise, in terms of retail value, that labels have committed to ship represents around three-quarters of what Saks Global forecasts it will receive from February through April. That means it’s still waiting to receive hundreds of millions of dollars in additional inventory to reach its target for its fiscal first quarter.

“We have resumed shipping to Saks Global,” Burberry’s CEO Joshua Schulman said in a statement. The brand plans to connect with Saks Global’s merchant team in the coming weeks as they place orders for the autumn and winter season, he added.  Christian Louboutin, Brunello Cucinelli, Zankov, Brandon Maxwell, Lafayette 148, and labels from conglomerates LVMH and Kering are also among the brands that have resumed or continued shipping.

To boost revenue, van Raemdonck said his team is focused on ordering the types of products from brands that sell quickly and need to be ordered again, such as cosmetics and seasonal or on-trend fashion items.  In November, as suggestions of a bankruptcy filing swirled, many brands slowed down or stopped their shipments altogether. But “some brands continued to ship during the whole process,” including Chanel, van Raemdonck said. The label operates via concession- meaning it runs its own shop within the department stores. Brands that use the concession model didn’t pause shipments, van Raemdonck said.

A Chanel spokesperson said in a statement that the company continues to ship products to Saks Global “without interruption” and is “supportive of their efforts to successfully restructure.”  The steadier flow of merchandise is a positive turn of events for the bondholders and other investors who provided Saks Global with billions of dollars in financing to help it emerge from bankruptcy. It’s also a welcome sign for shoppers who were dismayed by poorly stocked stores over the last year.

But there’s still a lot for van Raemdonck and his team to do. Saks Global needs to encourage those labels that resumed shipments to ship even more and those that have remained on the sidelines- wary of not getting repaid again- to get back on board.

“There’s none of our top one hundred brands that have told us- and I’m not aware that there’s any brand that has told us- they’re not doing business with us going forward,” said van Raemdonck. To be sure, some brands that haven’t resumed shipping are asking questions to get comfortable with the company’s financial position before sending products, he said.

When Saks Global filed for bankruptcy, court documents showed it owed some vendors tens of millions of dollars in back payments. Van Raemdonck declined to comment on those negotiations or on which brands haven’t resumed their shipments.  He also needs to woo back customers that have shifted their shopping to rivals Bloomingdale’s, owned by Macy’s Inc., and Nordstrom Inc., both of which have seen sales increase at Saks Global’s expense.

Saks has secured access to $825 million of the $1.75 billion in capital committed by investors during the bankruptcy process. The company has “ample liquidity to buy inventory,” van Raemdonck said. Sales are down this year versus last year because the company is still working to have enough merchandise in stores, he said.

The value of inventory that Saks Global has received so far in February is down a low-single-digit percentage versus the same period last year, the CEO said.

Bergdorf Goodman