How a real estate scion’s risky dealmaking pushed Saks Global to the brink

In the retail world, Saks Global executive chairman and newly appointed CEO Richard Baker is known for having the opposite of the “Midas touch” when it comes to dealmaking.

The real estate scion bought the Lord & Taylor department store chain in 2006 and then sold it in 2019 as a shell of its former itself—after which its new owner shut its brick-and-mortar stores the following year. Ditto the Hudson’s Bay chain in Canada, which Baker bought in 2008, only to liquidate it last year, ending a 355-year run in business. Baker’s HBC conglomerate, the precursor to Saks Global, bought the online flash sales website Gilt Groupe a decade ago but quickly dumped it, selling it at a loss in 2018. And his troubles extended to overseas adventures: Baker’s attempt to launch Hudson’s Bay stores in the Netherlands in 2017 was a monumental flop, with the Dutch stores closing two years later.

Indeed most of the chains Baker has touched in the last two decades have failed—and reports over the weekend suggest the Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman luxury department stores that he brought together in a 2024 deal that created Saks Global could be heading to bankruptcy court soon. (The company had been known as Hudson’s Bay Company for years, but switched to Saks Global when Baker spun out Saks and bought its arch-rival Neiman.)

Over the weekend, Bloomberg reported that Saks Global, after missing a $100 million interest payment to bondholders that was due Dec. 30, was negotiating a $1 billion lifeline to stave off a Chapter 11 filing. (Last June, Saks Global restructured its debt to ease the burden but its business has continued to deteriorate, reporting in October a 13% year-over-year drop in revenue to $1.6 billion in the second quarter.) Adding to Saks Global’s problems: Marc Metrick, the previous CEO, resigned last week, leaving Baker to step into the role. (Though Metrick had a hand in Saks Global’s woes, he was a respected 30-year veteran of Saks Fifth Avenue and was widely seen as an executive facing a tough situation and executing Baker’s strategy.)

“Mamma’s (and pappas) don’t let your babies grow up to be real estate developers that think they know about retail,” deadpanned Steve Dennis, a former Neiman executive and president of SageBerry Consulting, in a recent note criticizing the Saks-Neiman merger. Through Saks’ media relations staff, Baker declined to comment.

To be fair, Baker has also had his triumphs: He sold Hudson’s Bay’s discount chain Zellers to Target for a fortune in 2011 and for a time in the 2010’s, Saks was handily besting its rivals. Baker also sold the German retailer Galeria Kaufhof for a tidy profit in 2019.

In a LinkedIn post announcing his departure, Metrick wrote that “The last few years have been challenging… This is a hard business, even when times are good.” Metrick did not respond to Fortune‘s request for comment.

And there is no denying that most department stores, even luxury ones, have struggled for years. But Saks Global appears to be suffering from a more fundamental strategic mistake: focusing too much on financial and real estate engineering, and insufficiently on Luxury Retail 101.

An ill-fated marriage?

The Saks-Neiman merger in a $2.65 billion deal in mid-2024 was the culmination of a plan Baker hatched in 2005 when he formed a private-equity firm to snap up retailers with valuable real estate.

The idea with the Saks-Neiman tie up was to create a single U.S. luxury behemoth that could wield more clout with vendors and glean operational cost savings, with value propped up by its valuable flagship stores. (Neiman had spent years under private equity management and filed for Chapter 11 protection in 2020, felled by the COVID pandemic sales collapse. But it did later emerge from bankruptcy protection with far less debt.)

Ultimately, however, many of the stores competed with one another, and the deal came amid fashion brands’ movement toward selling their wares at their own stores or online, rather than department stores. And as often happens with private equity acquisitions of retailers, the companies were larded with unsustainable debt, which made investing in the core business more difficult and led to penny-pinching measures that have been destructive to the businesses.

Chief among the damaging moves in the Saks-Neiman Marcus saga has been the company’s decision in 2023 not to pay hundreds of millions of dollars in vendor invoices on normal terms, and instead stretch them out over 12-month terms to manage an enormous backlog of overdue bills. Many vendors decided to stop shipping or ship less to Saks, leading to empty shelves—a situation that hardly screams “luxury retail.”

You can’t sell inventory you don’t have, after all. In October 2025, S&P analysts wrote that Saks Global had a “less-than-adequate in-stock inventory position.” And the company lowered its earnings guidance for the year, citing “inventory challenges.”

What’s more, in an effort to conserve cash, Saks made some key mistakes that undermined the brands’ power, robbing stores of the sense of fun and wonder that is key for a luxury retailer. For the 2024 holiday season, the cash-strapped Saks decided not to put on its annual light show on Manhattan’s Fifth Avenue to save money, for example—a move that disappointed many New Yorkers. (The show returned in 2025.) And in March, Saks Global’s decision to close Neiman Marcus’s iconic flagship in downtown Dallas, its hometown, was met with such outcry by locals, it reversed the move.

Meanwhile, two key rivals, Bloomingdale’s (which is part of Macy’s Inc) and Nordstrom, have swooped in to scoop up market share from Saks Global. Last quarter, Bloomingdale’s comparable sales were up almost 9% and Nordstrom’s rose 4.1 %, in the first half of 2025. Both had struggled in recent years but are now investing in store experience and, crucially, they have the goodwill of vendors.

Focusing on core strength

It’s perhaps unsurprising that on Baker’s watch, Saks Global and its predecessor HBC made moves that were much more about financial engineering and real estate than about retail fundamentals. Real estate is the industry where Baker’s family made its fortune: His father, Robert Baker built a major shopping mall development company. But many of these moves have proved damaging.

For instance, in 2021, HBC spun off Saks’ digital business in the hopes of putting it on the stock market and getting a massive valuation of the kind e-commerce giants like Etsy and Chewy were getting—even though at the time the conventional wisdom in retail was that a chain’s e-commerce and stores businesses should be completely interwoven for maximum effect. Meanwhile, the company’s real estate assets—valuable, cavernous stores, often in desirable downtowns—are not liquid and require big investments to draw a buyer, so monetizing them is difficult.

Now, as Baker himself takes the reins of Saks Global without the operational or merchandising experience other retail CEOs have, he will have to quickly fix its debt problems. A bankruptcy filing will not mean Saks Global will go out of business—no one expects that—but it could mean it emerges with fewer stores and even more distrustful vendors.

“Excessive debt is a retail killer,” Neil Saunders, managing director of GlobalData recently wrote in a research note. “This has visibly played out at Saks with delayed payments to suppliers, a lack of funds to properly invest in the proposition, and a constant battle to stay liquid.”

It’s a formidable challenge. And even if Baker is able to put Saks Global’s house in order, it remains to be seen whether the U.S. luxury shopper will come back. 

This story was originally featured on Fortune.com