What to Watch: Saks, Neiman’s and Bergdorf’s — the Challenges Ahead

This story originally appeared Tuesday and was updated on Wednesday at 4:15 p.m.

Exemplar Luxury Group emerged from bankruptcy in June clearly in far better shape, but it’s not exactly out of the woods yet.

“We have a bright future,” said Geoffroy van Raemdonck, chief executive officer of the Exemplar Luxury Group, or ELG, when the company emerged from bankruptcy June 26. “We have all the financial strength that allows us to dream, and most importantly, execute what our plan is, and realize the full potential of Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman.”

ELG emerged from Chapter 11 with new owners, fewer and best-performing stores, a healthier balance sheet with 75 percent less debt and a lower cost structure, and steadily improving vendor relations. Key designers and brands have resumed shipments and are getting paid. The retailer said it has $900 million in gross liquidity to fund its operations as it rebuilds the business, which had been decimated under the former ownership of Saks Global. 

For this year, ELG expects to generate $85 million in adjusted earnings before interest, taxes, depreciation and amortization. ELG hopes to generate a net profit for the year, but that remains to be seen. 

ELG projects more than $7 billion in gross merchandise value. From February through July 2026, ELG exceeded its plan by approximately $400 million of gross merchandise value, sources said. From Jan. 14 through May 2 this year, sales totaled $1.6 billion. The second half of the year should produce greater volume with fall, winter and holiday fashions and vendor receipts ramping up.

By 2030, the company expects to generate $9 billion in annual gross merchandise value, or approximately $7.2 billion in revenue.

But it’s too soon to declare victory.

ELG has to battle back to recapture brand prestige and lost share in its remaining markets. It has the wherewithal to navigate through 2026 but must generate enough cash flow to meet interest payments on its remaining $840 million in debt, and reenergize the business with newness, exclusives and entertaining, innovative events that entice shoppers this year and beyond.

ELG has an estimated $50 million, give or take a few million, in annual interest due from its $500 million exit term loan provided by a lender group led by Pentwater Capital Management and Bracebridge Capital, ELG’s new owners. The exit term loan is paid-in-kind and therefore there are no cash payments due for the first two years post-emergence from the bankruptcy.

There could also be around $18 million in interest due in fiscal 2026 for the $340 million asset-based lending facility from Bank of America, though the actual cash interest depends on how much ELG draws and the interest rate which is variable.

The company does not have fixed interest rate obligations on either its ABL or exit term loan.

In addition, ELG owns the Saks Fifth Avenue Manhattan flagship and the land underneath. It has monthly payments of about $4.6 million (just over $55 million annually) on a $1.25 billion non-recourse loan on the flagship taken out about a decade ago, when the business was controlled by Richard Baker. The principal is due in 2035.

There’s about $7.7 million due monthly ($92.4 million annually) on the flagship’s ground lease. However, this rent arrangement is, as one source indicated, “intercompany” meaning it goes to an affiliate of ELG and doesn’t represent cash outflow.

Of course, there are other normal course of business costs, such as rents on stores, payroll, taxes and purchasing inventory, but they’re greatly reduced following ELG’s dramatic downsizing. Through the bankruptcy, 18 Saks stores closed, leaving 15 operating; 57 Saks Off 5th stores closed, leaving 12 standing, and three Neiman’s closed, leaving 33 operating. The downtown Dallas flagship will close at the end of September and the Willow Bend store in Texas will close next January, leaving 31 stores at that time. There have also been about 2,000 staff cuts, and consolidations of various functions. The buying and marketing teams of Saks and Neiman’s have been centralized, while Bergdorf’s maintains its own team. During its Chapter 11 process, ELG reduced its fixed costs by more than $300 million annually on a run rate basis, the company indicated. The $300 million excludes costs related to store closures.

Watch for ELG to better differentiate the merchandising and marketing of Saks and Neiman’s with new approaches. As van Raemdonck previously told WWD, “We want to separate and differentiate them. If you take the six markets where Saks and Neiman’s are either in the same mall, or across the street like in Beverly Hills, the overlapping customer is between 10 and 15 percent, which [means] the customer is telling us they’re different brands. And in the future, we want to make them even more different, so that there’s a reason to shop in both of them, or to be deeply loyal with one of them.”

There’s room at ELG for further integrations, cost reductions and synergies, like creating a new loyalty program where points accumulated at Saks, Neiman’s or Bergdorf’s could be redeemed at any of those stores. Gift cards could become interchangeable between the three retailers. And there could be greater sharing of customer and sales data so sales associates can better assist shoppers. Returns could one day be taken at Saks or Neiman’s stores, regardless of where the items were purchased.

Also, watch for Neiman’s to rely more heavily on concessions. Historically, Neiman’s hasn’t. Yet increasingly it’s the only way retailers can attract luxury vendors to their stores. There are upsides here. The concession model preserves cash. Rents based on sales volumes are collected, and vendor shops are continually well stocked. A department store can make more money with a concession than via wholesale, depending on the brand. The downside is designers completely control their concessions and retailers may not like how they stock the shops, particularly if it’s too fashion-forward or basic for customers. Concession agreements between vendors and retailers last for years, depending on the extent of the buildout. Regarding concessions, ELG said in a statement, “The majority of our business remains the wholesale model. There are a range of models in which we work with brands and consignment and concessions are not standard or most common across Exemplar Luxury Group.”

“The question is whether Saks and Neiman’s have enough liquidity now, can continue to improve their operations, and are strong enough to continue paying the brands,” said Jeffrey Chubak, a bankruptcy expert and partner in the law firm Amini LLC. Chubak, who represented creditor committees in past bankruptcies by Neiman’s, Barneys New York, Aéropostale and Bed, Bath & Beyond. A tiny downturn in the luxury sector, Chubak suggested, would have a big impact on ELG. His firm has not been involved in the Saks Global bankruptcy.

Regarding liquidity, ELG has stated, “We have $900 million of gross liquidity or $750 million net liquidity to support operations and remain agile if there is a tiny downturn in the luxury sector.”

The luxury sector is on a modest upswing this year after two years of declines, boding well for ELG. The Bain-Altagamma Luxury Goods Worldwide Market Study presented in June reported that personal luxury goods spending should grow at least 1 percent and possibly as high as 6 percent this year depending on how world affairs and tourism develop.

What’s also encouraging, as officials told WWD, is ELG’s strengthened focus on luxury and full-price selling after winding down most Saks Off 5th stores leaving just 12 to handle residual inventory from Neiman’s, Saks and Bergdorf’s. ELG has been exiting areas of the business “not fundamental to luxury retail and streamlining it supply chain for faster shipping, improved customer experience and cost efficiencies.”

“Bergdorf’s looks good, but I see pretty few shoppers every time I go in. The inventory looks light, but they have all the right designers, brands and styles,” said one C-suite retailer who visited Bergdorf’s in August and purchased a designer handbag. “It was a style I had not seen anywhere else.”

“The inventory position looks much better than it did around the bankruptcy, although I think it is too early to call it completely normalized,” observed Hannah Alley, a luxury brand and retail consultant and former Selfridges brand partnerships and marketing manager. “Now I’d be looking at whether it can consistently get enough of the right merchandise. For a luxury department store, stock goes well beyond the volume sitting on the floor. Customers notice the newness, sizes, color depth, key launches and whether the pieces they came for are available. Receipt numbers can tell us merchandise is flowing again, but a store can still feel thin if the best product is missing or it cannot replenish quickly when something starts selling.”

Of ELG’s three luxury retail banners, Bergdorf’s appears to have been “the most protected” from merchandise voids, helped by its focused flagship model and mix of concessions and consignment, Alley said. “Saks looks materially healthier than it did going into bankruptcy and its smaller estate should help because Exemplar can now concentrate product and investment into fewer, stronger stores. Neiman’s looks somewhat more uneven by location and channel, so I’d be cautious about reading group-level receipt numbers as proof that every store is back where it needs to be.”

Overall, however, “The supplier recovery is encouraging,” she added. “Prada, Brunello Cucinelli and Zegna have all confirmed resumed shipments and hundreds of brands restarted deliveries by the first quarter….The question is whether those brands give the group their strongest allocations, exclusives and enough flexibility to chase winning product. In luxury, being supplied and prioritized by a maison are two completely different things. Saks, Neiman’s and Bergdorf’s are competing with those brands for customers as well as product, so the quality of the assortment becomes even more important.”

She said the departure of Paolo Riva, ELG’s chief buying officer, in September puts greater scrutiny on buying, vendor relationships and responses to selling trends. “Holiday will be a major test of customer perception. I’m less concerned about the deeply embedded VIC (very important client) than the affluent customer without a strong adviser relationship. A VIC has somebody calling, sourcing pieces and inviting them back. The occasional luxury customer may have spent the past year getting used to Nordstrom, Bloomingdale’s, or a maison boutique, and may have a relationship with an adviser there. Winning that behavior back can be harder than recovering one lost transaction.”

Here’s something else to watch for, though it’s separate from ELG. Unsecured creditors for the Saks Global bankruptcy, which include some large vendors like Chanel and LVMH Moët Hennessy Louis Vuitton, have been poring over documents in the bankruptcy case. A $20 million funded litigation trust, like a war chest, was negotiated to possibly recover money owed and possibly pursue legal claims. It could investigate insider transactions, executive compensations and loans, and the $2.7 billion acquisition of the Neiman Marcus Group in December 2024, which formed Saks Global and led to its bankruptcy in January 2026. It remains to be seen whether any legal action is taken and if Richard Baker, who led the acquisition, and others, become targets of such action. Eighty percent of whatever is recovered would go to secured creditors, 20 percent to unsecured creditors.