Saks, the luxury e-tailer, has raised more money to sustain its growth. On Wednesday, Saks announced that it closed on a $60 million “upsize” facility with Pathlight Capital LP, thereby building up an existing senior secured term loan facility. The closing, which happened on Aug. 11, resulted in a $175 million total credit facility, in which Pathlight served as administrative agent.
According to Saks, the upsize facility provides additional liquidity for ongoing working capital needs and to fund strategic growth opportunities. “Saks’ strong foundation combined with its continued positive momentum reinforces our belief in the company’s potential to lead in luxury e-commerce,” Matt Williams, managing director of Pathlight Capital, said in a statement.
Vince Phelan, chief financial officer of Saks, added, “Our ability to secure this additional financing demonstrates our strong foundation and trajectory. We appreciate the Pathlight team’s continued partnership, enhancing our financial flexibility and ability to support future growth initiatives.”
In March 2021, Saks Fifth Avenue was reengineered by its parent, the Toronto-based Hudson’s Bay Co., with a new business model, equity partner and stronger balance sheet, splitting the Saks Fifth Avenue store fleet and saks.com into separate companies. Insight Partners, a venture capital and private equity firm, made a $500 million minority equity investment in the Saks e-commerce business, valuing it at $2 billion.
In August 2021, saks.com secured the $115 million senior secured term loan arranged by Pathlight Capital LP, as part of a round of financial transactions meant to strengthen its liquidity and potential to grow. At the same time, Saks.com closed on a syndicated $350 million, asset-based five-year revolving credit facility arranged by Bank of America NA.
The increased funding help saks.com compete in what’s become a vibrant, resilient sector with an escalating battle to win over fashion customers, between Mytheresa, neimanmarcus.com, Moda Operandi, Net-a-porter, Farfetch and Matchesfashion.com E-commerce gained enormously through the pandemic, but lately its rate of growth has slowed as shoppers, eager to get out of their homes, have returned to visiting malls and stores.
Saks.com has been using its money to beef up its technology, marketing, contact centers and to enhance its shopping experience with personalization, styling services and shipping and return options, and to upgrade the overall look and feel of the website. There has been speculation that ultimately, transforming the Saks Fifth Avenue stores and e-commerce businesses into separate companies is a step to potentially spin off the e-commerce operation into a public company, depending on market conditions.
A year ago, Saks.com was reported as generating about $1 billion in annual sales, though it’s likely well over that figure now. “This is just early days for online shopping, especially in luxury,” Richard Baker, governor, executive chairman and chief executive officer of Hudson’s Bay Co., said in an interview at the time of the reengineering of Saks. “There is an opportunity for luxury to triple its size online. No one really knows how retailing is going to play out.”
Saks Fifth Avenue e-commerce
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