Inside Saks Fifth Avenue's fight for its life: How 12 months of upheaval left the luxury icon in bankruptcy

If you visited Saks Fifth Avenue — the century-old department store in Manhattan — just one month ago, you’d have seen it was literally glowing, its façade decorated with thousands of glittering lights for the holidays.

Now, the twinkling has stopped, and the elaborate holiday displays have been dismantled. Black paper covers the windows.

Late on Tuesday, Saks Global filed for Chapter 11 bankruptcy in the Southern District of Texas.

It capped a tumultuous 13-month chapter for the company, which also owns Bergdorf Goodman and Neiman Marcus, that was marked by executive turnover and lawsuits, missed payments, and broken promises.

By the end of the year, dozens of vendors — some of which had not been paid in full for over a year — had paused shipments to the company, leaving it without the necessary inventory to survive past the holiday season, according to the bankruptcy declaration.

What happens next could have consequences for customers. Stores could close, and layoffs could follow. Brands, many of which are unsecured creditors and could never get paid back, are waiting in the wings.

“It’s been a roller coaster until now,” Gary Wassner, the CEO of Hilldun Corp., which acts as a sort of guarantor or insurer for brands, told Business Insider.

Hilldun represents about 140 brands that sell to Saks — in the past, it’s worked with big names like Tommy Hilfiger, Marc Jacobs, and A.L.C. — and is owed about $66 million, Wassner said.

“It’s a relief at this point,” he said. “I’m finally able to plan on how to move forward.”

A match made in luxury hell

2025 was supposed to be a great year for Saks.

For more than a decade, the retailer, with its large physical footprint, had struggled to maintain its dominance as shopping patterns shifted, with customers turning to e-commerce or brand-owned outlets. It wasn’t alone: Nordstrom was treading water before it was taken private, and Macy’s has endured a drawn-out turnaround plan.

Its problems intensified following the pandemic, when inflation and economic uncertainty curbed discretionary spending. By 2023, it began to face challenges in paying vendors.

Then, at the end of 2024, Saks finalized its $2.7 billion acquisition of Neiman Marcus Groupforming a luxury behemoth backed by the technology of Salesforce and Amazon, which took stakes in the new company as part of the deal. The move was seen as a solution to the beleaguered retailer’s problems.

“It was touch-and-go up until the Neiman Marcus deal occurred,” Wassner said. “Everyone thought that would solve the cash flow problems.”

Instead, according to Saks’ bankruptcy filing, the deal created more problems, leading to “immediate liquidity challenges” and a capital structure that became “unsustainable.”

The deal was financed by $2.2 billion worth of junk bonds — debt that carries high interest rates — which S&P Global warned investors about at the time. It left the company strapped for cash, leading to a round of layoffs to start the year (multiple more would follow).

“These highly leveraged deals — and these mergers and acquisitions are almost always highly leveraged — start out in a less than wonderfully attractive way,” Mark Cohen, the former CEO of Sears Canada, told Business Insider. “This is a house of cards from a financial point of view.”

One of the first red flags arose on Valentine’s Day, when vendors, who are owed hundreds of millions of dollars, according to bankruptcy documents, received an “I-love-you-not” from then-Saks Global CEO Marc Metrick.

He told them that they’d have to wait. Saks would prioritize paying back the lenders who helped finance the Neiman Marcus acquisition. It would pay its vendor bills — in some cases, more than a year past due — in installments stretched over 12 months that wouldn’t begin until summer.

Vendors, some of whom were burned by similar communications prior to the 2019 bankruptcy of the iconic department store Barney’s, were left between a rock and a hard place.

One vendor, who said he is owed six figures, called the situation “agony.”

“We thought it was going to be a smoother transition and that this was going to be a global luxury masterpiece in the making,” the person said. “That just did not happen.”

Brands could withhold inventory shipments — which would risk ruining relationships with a core customer and put more strain on Saks’ balance sheet — or continue business as usual and hope for the best.

Saks blames those who chose the former for its problems.

“The inability to timely pay vendors exacerbated the payables balance and further strained relations with brand partners,” the company’s bankruptcy declaration says. “In turn, vendors were less willing to ship goods to the Company, leaving the Company unable to build an adequate amount of seasonal inventory leading into Spring of 2025.”

Those who did ship inventory were further disappointed in July, when the payment schedule wasn’t met.

That month, Saks’ financial vulnerability was made clear when a nine-figure interest payment prompted a debt restructuring. A majority of bondholders agreed to provide cash in return for being moved up on the retailer’s cap table. Basically, meaning that if (or when) Saks files for bankruptcy, those bondholders get first dibs — likely before any vendors.

“I will say the biggest part of it has been the mental cruelty of this situation, waking up, not knowing what’s going to happen, trying to keep things going,” the vendor who spoke to Business Insider said.

A looming spring season

In the fall, things had dissolved to the point that several labels were withholding inventory.

S&P analysts wrote that Saks had a “less-than-adequate in-stock inventory position.” In October, the company lowered its earnings guidance for the year, blaming inventory challenges.

“You are going to ship to somebody you know you’re going to get paid from,” Tim Hynes, the global head of credit research at Debtwire, told Business Insider. “You will give Saks what’s left, you’re not going to give them the best.”

Some brands went even further, taking direct aim at Saks.

Skincare brand Sunday Riley said it threatened to sue if payments were not made, Retail Dive reported in August.

In October, Jovani Fashion, the dressmaker made famous by “Real Housewives of New York” star Luann de Lesseps, filed a lawsuit against Saks Global — a rare step in a relationship-driven industry. Jovani said Saks owed $295,651 for merchandise it accepted this year. (Saks has denied wrongdoing.) Other brands have since followed suit.

By the end of the year, murmurs of a potential bankruptcy filing made headlines.

Only a killer holiday season could save the store — and that did not happen. Inventory was still lagging, and there were issues integrating the Neiman Marcus and Saks platforms, which further disrupted inventory during any retailer’s most critical season.

On the last day of 2025, The Wall Street Journal reported that Saks had missed a nine-figure interest payment.

“The Debtors faced a perfect storm of liquidity challenges leading into January,” a bankruptcy filing said.

In the background, the bankruptcy proceedings were already being sketched out. Saks had hired lawyers and advisors to help with a restructuring and was arranging a way to push out its CEO.

The bankruptcy won’t be an overnight fix — it will take some time for inventory levels to return.

Vendors and shoppers alike are hoping for some sort of normalcy to return as the all-important spring season approaches.

“We are sitting with $130 million in orders that our clients want us to approve,” Wassner said. “I would expect, within two to four weeks, the shelves will look very different.”

Kaja Whitehouse contributed reporting to this article.

Editor’s note: This story was first published on January 4, 2026, and has been updated to reflect recent developments.