“We have to get through the regulatory process but otherwise it’s business as usual,” Marc Metrick, chief executive officer of Saks, told WWD on Thursday.
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Discussing what lies ahead in the immediate future, Metrick said, “We will focus on what we can control and our strategy.” If the government green-lights the deal, Metrick will become CEO of Saks Global, the combined Saks-Neiman Marcus entity.
He stressed that underlying the deal is a move to “growth” and not shrinking the business, though mergers often lead to consolidations. He also said the deal is designed to “motivate” vendors to do more business with Saks Global, and motivate customers to shop more at both Saks and Neiman’s.
Asked about the implications of naming the combined entity “Saks Global,” Metrick said it reflects the complex nature of the HBC portfolio including all its real estate, intellectual property, data, stores and other assets, and that it underscores the combined entity cannot be characterized as a traditional department store operation. When asked if the name suggests opening stores overseas, Metrick replied that it’s too soon to discuss the next phase. HBC operates stores only in North America.
While the deal, which was disclosed Wednesday, was not unexpected, it did reverberate through the industry, raising enormous questions and concerns. Metrick said he reacted by sending a letter to vendors and employees, a copy of which was attained by WWD.
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In the letter, he wrote, “When this transaction closes, which will happen after customary regulatory review, we will establish Saks Global, a technology-driven company that brings together renowned retailers and real estate assets.”
He also wrote that Saks Global “will build on the strides made across the Saks Fifth Avenue ecosystem to provide better experiences for our customers. At the same time, we will be able to provide new opportunities for our brand partners by helping them reach their target customers across channels. In short, we want your business to grow alongside ours as we take advantage of the strong growth expected across the global luxury industry in the years to come. I’m looking forward to taking on the new role of Saks Global CEO, overseeing all of Saks Global’s retail and consumer businesses, including leading the strategy to advance the luxury shopping experience.”
Most importantly, Metrick wrote that “absolutely no funds that otherwise support operations or vendor payables were used for the financing or associated costs of this transaction. It is our and SFA’s priority to fulfill our obligations to our partners. In the coming weeks, we plan to provide an update on the financial position for Saks and SFA from now through transaction closing.” In recent months, Metrick has been addressing late bill payments to certain vendors.
“Following the close of the transaction, we expect Saks Global to have a well-capitalized balance sheet, with a new debt and equity structure, which will give us even further financial flexibility and provide greater opportunities for the ways in which we work together,” Metrick wrote.
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