Despite Saks’ bankruptcy, your store isn’t closing yet

Saks Fifth Avenue shopping sprees aren’t over just yet.

The Chapter 11 bankruptcy of Saks Global, the parent company of Saks Fifth Avenue, sent shockwaves across the luxury retail world this week.

The dramatic move comes barely a year after the company rapidly expanded its 13 million-square-foot real estate footprint with to the recent acquisition of Neiman Marcus and Bergdorf Goodman.

Saks Global is now in the midst evaluating its operational properties, according to the filing, signaling closures, lease negotiations and asset sales to come.

Luxury department locations and off-price stores will stay open in the meantime, however, thanks to a $1.75 billion financing package.

Oren Bitan, partner at the business law firm Buchalter, told The Post that Saks Global has been “teetering,” since the debt-ridden deal in 2024, which took on 36 Neiman Marcus stores across 17 states and two Bergdorf Goodman stores in New York.

“There’s been sort of whispered rumors, are they going to shut everything down, abandon these flagship stores?” Bitan said. “Appears to be they’re not willing to throw in the towel just yet, and getting $1.75 billion in financing certainly gives you some ammunition to stay alive.”

Some closures, however, are already underway.

Recent months saw the company try to stem the bleeding by offloading major properties. The company confirmed in early November plans to close nine Saks Off Fifth stores in cities like Austin, Chicago and Washington, DC.

Late last year, the company sold the land beneath a 200,000-plus-square-foot Neiman Marcus in San Francisco. A Saks Fifth Avenue across the street had already closed.

Saks Global operates 71 full-line luxury locations, plus off-price locations. That portfolio includes 33 Saks Fifth Avenue stores and 36 Neiman Marcus stores in prime luxury corridors like Beverly Hills and Manhattan, as well as dozens of discount stores like Saks OFF 5th and Last Call.

The company owns or holds the ground leases for 5.5 million square feet across 39 of these stores. These holdings may prove to be the retailer’s most valuable assets throughout the bankruptcy proceedings — as well as its biggest liabilities.

Mark Brutzkus, partner and chair of the consumer products practice at Stubbs Alderton & Markiles LLP, told The Post that the objective for Saks Global is now reducing its massive debt.

“One of the ways they’re going to be doing that is reorganizing their operations and closing what they perceive to be the underperforming stores,” Brutzkus said. “They’ve already started to do that.”

The land beneath a two-city-block Neiman Marcus in Beverly Hills was sold off just last month. Similar to the San Francisco sale, the deal sold the property to investors and leased it back, thereby gaining liquidity while keeping shoppers. Previous reports pegged the combined sale prices around $100 million.

Saks Global could soon face legal action from landlords at its leased locations. The company has already asked courts for permission to shutter four “dark stores,” or retail locations no longer open for business.

These four dark stores number among the company’s 81 Saks OFF 5th Stores, which are located across more than 20 states. That doesn’t necessarily spell the end of Saks Global’s cheaper retailers, Brutzkus said.

“If it’s an underperforming store, it’s going to close,” Brutzkus said. “That’s just the nature of the beast in terms of a Chapter 11 bankruptcy.

Brutzkus estimated it will take six months to a year before significant closures occur.

Saks Global’s flagship on Fifth Avenue, however, is leased from a separate entity, and therefore safe from a sale. The fate of Neiman Marcus’ Dallas flagship is unclear, however. The chain’s 129,000-square-foot location was slated to close early last year, but the decision was reversed days before it hit the chopping block.

“I think the foremost question is, are the stores staying open? Are those flagships continuing to exist? I think that’s on everyone’s mind,” Bitan said.

Saks Global is the largest luxury powerhouse to file for bankruptcy in recent memory, leaving its bankruptcy and thousands of creditors in uncharted territory.

“It’s hard to compare these top luxury retail stores with anything else,” Bitan said. “Party City, Forever, 21 Rite Aid, those are not really in the same league as this.”