Key Takeaways:
The holiday season didn’t rescue Saks Global—it finished it off, forcing luxury fashion and beauty players to rethink how they reach high-end and aspirational consumers as the owner of Saks, Neiman Marcus, and Bergdorf Goodman files for bankruptcy.
Roughly a year after wagering its future on a $2.7 billion merger with rival Neiman Marcus, the combined luxury department store chain last week sought Chapter 11 protection and $1.75 billion in debtor-in-possession financing after vendors pulled back shipments over missed payments, wiping out roughly $550 million in expected inventory receipts in the second half of 2025.
For luxury beauty insiders, the filing strips away any remaining illusion: the US department store wholesale model is broken at scale, as shown by the combined company’s latest results. In the fiscal year ended February 1, 2025, Saks’ revenue dropped 14%, driven by lower sales across all categories.
“This bankruptcy is the final signal that the department store can no longer be relied on as the main volume driver for luxury beauty,” Daniel Langer, Chief Executive of Équité and Luxury Professor at Pepperdine University, told BeautyMatter. “For brands, it is a signal to pivot away.”
Over the decades, US department stores served as the backbone of luxury beauty distribution. Since Neiman Marcus filed for bankruptcy in 2020, beauty brands have steadily reduced their reliance on the channel, closing freestanding doors while expanding into direct-to-consumer, specialty retailers such as Sephora and Ulta Beauty, and e-commerce platforms like Amazon. But luxury beauty now faces a distribution reckoning—one that will deepen unless brands accelerate pandemic-era shifts in where and how they sell.
As Saks’ bankruptcy brings renewed scrutiny to the highly leveraged merger led by real estate magnate Richard Baker, now replaced by former Neiman Marcus CEO Geoffroy van Raemdonck, legacy wholesale relationships are facing their most severe stress test yet.
Who Is Exposed? Beauty’s Biggest Creditors
The cost of remaining exposed to the US’s largest luxury department store network, long prized for access to affluent shoppers and brand aspiration, is now coming into focus.
Beiersdorf, Estée Lauder, and Puig are the publicly traded beauty companies owed the largest amounts by Saks—$22.2 million, $16 million, and $12 million, respectively—according to the list of the 30 largest unsecured creditors in the bankruptcy filing. Beiersdorf owns La Prairie, while Estée Lauder’s luxury portfolio includes La Mer and Tom Ford Beauty. Puig is the parent house of brands such as Dr. Barbara Sturm and Penhaligon’s.
On the private side, Fine Fragrances Distribution, Europerfumes, and Sisley hold some of the largest claims, at $21.6 million, $17.3 million, and $9.6 million, respectively.
More broadly, Chanel—which generates a significant share of its revenue from beauty, particularly fragrances—tops the list of unsecured creditors with a claim of $136 million. It is followed by other luxury groups, including Kering, which currently owns fragrance house Creed, with a claim of $59.9 million, and LVMH, whose portfolio includes cosmetic brands such as Maison Francis Kurkdjian and Guerlain, with claims totaling $26 million.
“This shows that overall, the legacy brands across industries are the ones that have the highest exposure,” Langer said. “The future of beauty is not in a wholesale department store, but in channels where the brand controls the client relationship and experience more directly.”
Saks argues that its bankruptcy is not the result of a broader slowdown in luxury demand, but rather the consequence of lower inventory levels on missed payments following its merger with Neiman Marcus—a disruption that triggered immediate liquidity pressures. Chief Restructuring Officer Mark Weinstein said in his declaration in support of the filing that “when stores have inventory, the inventory sells.”
However, do luxury department stores still play a central role in how consumers shop for luxury products, including beauty, as those categories become increasingly accessible through other channels?
Beauty remains a cornerstone category for high-end department stores, driving frequent purchases and repeat foot traffic. But Saks has struggled to articulate a strategy for securing the next generation of consumers as its ultra-wealthy core customer base ages, warned Neil Saunders, Managing Director at GlobalData Retail.
More middle-ground players such as Nordstrom and Bloomingdale’s have fared better. For Saks, the longer-term risk lies in replacing its top 3% of customers, those spending more than $10,000 a year and accounting for roughly 40% of gross merchandise value, over the next 15 to 20 years, Saunders said.
Too Many Doors for a Shrinking Luxury Audience
In a retail environment marked by growing independent boutiques and direct-to-consumer strategies, Saks is expected to sell some of the roughly 39 retail properties it owns or controls as it exits Chapter 11.
In the bankruptcy filing, Saks said it is “evaluating its operational footprint to ensure it is well positioned to invest in areas that present the greatest opportunities for sustainable, long-term growth for its luxury retail brands and partners.” It also added, “By strategically optimizing its footprint and sharpening its focus on luxury retail, the global debtors aim to uphold their iconic legacy.”
A slimmer real estate portfolio would further squeeze distribution options for beauty brands targeting consumers willing to spend $300 for a perfume or $500 on skincare— a risk that is especially acute because Saks and Neiman Marcus occupy a unique position in the luxury ecosystem, according to Saunders. “They are super-premium department stores where brands can sell very high-end products to an exceptionally affluent customer base,” he said. “If they disappear, that leaves a real hole, and brands will have to find alternative ways to reach those consumers.”
At the same time, the scale of the combined network has become part of the problem. Roughly 70 doors spanning about 12 million square feet, often clustered in the same malls or just blocks apart in markets such as Chicago, illustrate how an overbuilt luxury landscape has diluted traffic and undermined store productivity, said luxury consultant Glenn McMahon.
Scale has become a liability rather than an advantage for US luxury department stores, according to Martin Roll, a family business and family office expert and senior advisor at McKinsey. “Luxury retail isn’t about big boxes anymore, and Saks should have rethought its store network much earlier in the acquisition process to align with how luxury retail is evolving.”
The survival of luxury department stores will likely depend on how they approach experiences and customer personalization, Roll said. “Not everyone wants to shop at Amazon, so we will see a rebalancing of experiences because people will get tired of buying everything online.”
The Vendor Fallout and the Direct-to-Consumer Escape Hatch
Beauty companies may once again face the risk of unsold inventory, with smaller brands in a far riskier position due to their thinner balance sheets and limited ability to absorb missed payments, McMahon said.
“It’s devastating,” he added. “Vendors took orders six, nine, even twelve months ago. They manufactured the product, ordered components, shipped it, and then Saks didn’t pay them. Normal payment terms are 30 or 60 days. In February, Saks told vendors they would be paid in 90 days, but that didn’t happen.”
The strain of missed payments on vendors’ balance sheets is forcing them to scale back operations, lay off staff, and, in some cases, shut down entirely, McMahon said. “Smaller brands are bearing the brunt of the impact.”
Beauty companies should accelerate their presence online and in direct-to-consumer channels, particularly smaller brands that lack scale, as distribution options narrow within the luxury space, said Michael Schummert, Senior Advisor of Personal Care at Kearney.
“With the constant flood of new product launches, it’s become harder to stand out or find effective distribution strategies, making direct-to-consumer the better route for smaller beauty brands,” Schummert said, adding that he generally advises against selling through high-end department stores.
Costs linked to operating at luxury department stores, including staffing, in-store representation, and logistics, “are simply too high,” he said, leaving this type of wholesale distribution barely break-even for many smaller brands. A European beauty brand making less than $10 million in annual revenue is unlikely to make money in that channel, he cited as an example, calling it “an unsustainable model for smaller players.”
Could Europe be Next?
A similar existential test may lie ahead for luxury fashion and beauty brands in Europe—the other core pillar of Western luxury consumption—with industry experts divided on both the likelihood and timing.
Schummert believes a similar dynamic could emerge in Europe. While department stores in the UK and France have performed well in the past, many are now under pressure as consumer spending softens. The strain is most evident in fashion, but is increasingly affecting beauty as well, even if the fragrance category remains resilient, he said.
Luxury consultant McMahon, on the other hand, sees high-end department store closures as less likely in Europe. He argued that names such as Harrods and Galeries Lafayette operate on a smaller, more selective model, leaving them less exposed to the kind of overexpansion that has plagued the US market.
A Defining Moment for Beauty
Overall, Saks’ collapse “marks a definitive turning point for the beauty industry,” exposing the fragility of the wholesale model once the emotional connection is lost—and accelerating the shift away from it, Langer said.
Luxury beauty should have been one of Saks’ greatest strengths. Instead, by treating the category as a margin lever rather than an experience-driven business, the retailer eroded trust with vendors—fueling pullbacks that helped speed its downfall, Langer added.
One question that remains is how transparent the architects of the Saks–Neiman Marcus deal were about their intentions, given Baker’s prior dealmaking in Canada, which culminated in the closure of Hudson’s Bay’s entire store network last year, ending a 355-year retail legacy.
Unlike Saks, Neiman Marcus did not develop a reputation for delayed vendor payments following its 2020 bankruptcy, a distinction that initially gave suppliers hope when the merger was announced, Saunders recalled.
While Saks and Neiman Marcus framed the merger as the creation of a US luxury powerhouse, the debt-laden structure of the deal made the venture’s outcome increasingly inevitable.
“There was skepticism from the outset, since Saks already had payment issues and vendors were wary,” Saunders said. “The surprising part isn’t that it ended in bankruptcy; it’s the speed at which it happened.”
