Saks Inc. has officially filed for Chapter 11 bankruptcy protection, marking a pivotal moment in the struggling luxury retail sector. The move follows years of declining sales, mounting debt, and failed restructuring attempts.
- Saks Inc. filed for Chapter 11 bankruptcy with liabilities exceeding $1.2 billion
- Debtor-in-possession financing of $300 million secured to sustain operations
- Same-store sales declined 25% YoY in 2024; full-year revenue fell to $780 million
- Company operates 46 stores across the U.S. and employs 5,700 people
- Projected store closures may affect up to 20 locations
- Debt includes $750 million in senior secured notes and $250 million in revolving credit facilities
Saks Inc. has initiated Chapter 11 bankruptcy proceedings in the U.S. Bankruptcy Court for the Southern District of New York, citing liabilities exceeding $1.2 billion and assets estimated at $850 million. The company disclosed that it has secured $300 million in debtor-in-possession financing to support operations during restructuring. This filing comes after a 25% year-over-year decline in same-store sales during the 2024 fiscal year, with full-year revenue falling to $780 million—down from $1.03 billion in 2022. The retail chain operates 46 stores across the United States, including flagship locations in New York City, Beverly Hills, and Chicago, and employs approximately 5,700 people. The bankruptcy filing underscores the deepening challenges facing traditional luxury retailers amid shifting consumer preferences and the rise of e-commerce. Despite previous attempts to restructure, including a 2021 asset sale to a consortium led by private equity firm Sycamore Partners, Saks struggled to regain profitability. The company’s debt load, including $750 million in senior secured notes and $250 million in revolving credit facilities, has remained unsustainable under current market conditions. The restructuring process is expected to result in significant store closures, with analysts projecting up to 20 locations may be shuttered. Creditors, including bondholders and major suppliers such as LVMH and Kering, are poised to assess their claims. The company has stated its intent to emerge from bankruptcy with a leaner footprint and a renewed focus on digital integration and customer experience. Market participants are closely monitoring the outcome, as the case could set a precedent for other distressed retailers. Stockholders, who held Saks shares prior to the filing, stand to lose their entire investment, while employees face uncertainty regarding job security. The proceedings may conclude within 12 to 18 months, depending on approval of a restructuring plan by the court and creditor consensus.