Why did Saks fail as other luxury retailers continue to thrive

Saks Fifth Avenue’s Parent Company Files for Bankruptcy

On January 14, 2026, Saks Global Holdings—the owner of Saks Fifth Avenue—entered bankruptcy protection.

Just two months earlier, Saks Fifth Avenue had marked the return of its iconic holiday lights at its flagship Manhattan location, an event that featured the Radio City Rockettes and seemed to signal a potential turnaround for the struggling retailer. The previous year, the company had canceled the festive display to reduce expenses.

However, what was meant to be a sparkling celebration now appears to have been a final flourish. This week, Saks Global Holdings officially sought bankruptcy protection.

The company, which also owns Neiman Marcus and Bergdorf Goodman, was unable to recover from over $2.5 billion in debt incurred after acquiring Neiman Marcus in 2024. Amazon, which contributed $475 million to support the acquisition, opposed the bankruptcy and declared its investment likely lost.

“They simply had too much debt and couldn’t keep up with payments. Now, they must find a new path forward,” explained Dana Telsey, a luxury retail analyst at Telsey Advisory Group.

In a statement released Wednesday, Saks Global announced it had secured around $1.75 billion in financing and reassured shoppers that its stores would remain open during the Chapter 11 restructuring.

Saks’ gradual decline has unfolded even as the global luxury retail market begins to rebound following a downturn in 2024.

According to Bank of America, luxury fashion spending rose 8% in early October compared to the previous year.

“The recent uptick is giving investors hope that the worst may be behind us for luxury demand,” said Luca Solca, a global luxury analyst at Bernstein.

After a surge post-pandemic, the luxury sector took a sharp hit in 2024, affected by shifting consumer preferences and a significant slowdown in China’s housing market.

While the broader market has started to recover, Saks has fallen further behind.

Economic Divide and Saks’ Struggles

Saks’ difficulties also highlight the so-called K-shaped economy, where affluent households—buoyed by rising home values and strong stock markets—continue to spend on luxury goods and travel. “Confidence among stockholders is so high that even younger consumers are willing to splurge,” noted Colleen Baum, a senior partner at McKinsey.

Meanwhile, families with lower or middle incomes, lacking financial buffers, are finding it harder to cover basic expenses. With a softer job market and persistent inflation, many have cut back on discretionary spending.

Saks, being privately owned, does not disclose quarterly earnings like public companies. However, Bloomberg Second Measure analysts report that Saks Fifth Avenue’s sales have dropped by double digits nearly every quarter for the past two years—a figure Saks has not confirmed.

The Changing Role of Department Stores

“The bankruptcy isn’t a sign that luxury is fading. It’s more about the challenges facing department stores as a whole,” said Jenna Rennert, a Vogue contributing editor. “Department stores once served as the entry point to luxury, but now luxury brands don’t need them as intermediaries.”

It’s not just brands moving away from department stores—Saks is also struggling to offer luxury shoppers a compelling reason to visit, as many have shifted toward boutiques and online shopping instead of traditional malls.

“This is a company-specific issue,” Telsey added. “Many luxury brands with their own stores, like Louis Vuitton and Hermès, are thriving and continue to attract customers.”

LVMH, the world’s largest luxury group, reported a 1% year-over-year increase in its latest quarterly results. As the parent of brands such as Louis Vuitton, Christian Dior, Fendi, and Marc Jacobs, LVMH is often seen as a barometer for luxury retail’s overall health.

However, Rennert cautioned against comparing Saks’ troubles to LVMH’s success. “LVMH excels because it controls both the brand and the customer experience, unlike department stores like Saks,” she said.

Looking Ahead for Saks

Saks’ recovery will likely involve closing select locations, rebuilding relationships with suppliers, and reducing its debt load. Despite these challenges, the 159-year-old retailer insists it will stay true to its legacy of offering top brands, strong partnerships, and dedicated service to loyal customers.

This article was originally published on NBCNews.com.