Luxury retailer to reduce vendors by 25% and invest heavily in joint ventures with Authentic and Amazon
Saks Global will drop 500 to 600 brands—about 25% of its vendor matrix—according to executive chairman Richard Baker, who shared the news at the World Retail Congress in London. “We had to rightsize our vendor matrix. When we put all these companies together, it turned out we had 2,660 vendors. Too many, and the terms of many of these vendors weren’t right,” Baker said.
The retailer plans to focus more on “controlled brands” through joint ventures like Authentic Luxury Group, its 50/50 partnership with Authentic. The venture manages brands including Barneys New York and Hervé Léger, with plans to roll them out at retail locations and expand global distribution.
Saks Global currently sees $9 billion in annual gross merchandise value, representing 60% of U.S. luxury fashion sales. “As part of our transaction, we have over $600 million a year in synergy,” Baker said. “We all know how hard we have to work to make an additional $600 million a year.”
“If I can bring our mix to 20 percent controlled brands with a larger margin and an ownership position with Salter, that’s a tremendous win for us,” he added.
Authentic CEO Jamie Salter explained, “You take 20 percent of $9 billion—that’s $1.8 billion. He’s gonna make 25 percent more on that product. That’s almost a $400 million change. That’s why this relationship is so critical.”
The retailer is also focused on stabilizing its finances. While it reportedly plans to make a $120 million interest payment in June, S&P Global recently put Saks’ “CCC-plus” credit rating on negative watch, citing liquidity concerns.
Baker and Salter promoted Saks’ new storefront on Amazon, which provides a walled-off luxury experience. “We had to be super-safe and attractive for our vendors,” Baker said, noting Amazon is developing similar platforms for markets including India, Japan, and the Middle East. “It took me six years to seal a deal with Amazon.”
He believes luxury on Amazon will become standard within five years.
Beyond retail, they’re expanding into entertainment and hospitality. Barneys Tulum is live, with more projects underway. A Barneys-themed show by Gossip Girl creators Josh Schwartz and Stephanie Savage is also in development. “It’s going to be incredible. It’s basically a commercial for Barneys,” said Salter.
They also envision Barneys-branded residential towers in cities like Bangkok. “When you come with your spouse and they immediately understand that Barneys is a luxury apartment house… those cues are very important,” Baker said.
Looking ahead, the two teased a possible Saks Retail Alliance with global partners. “The number of ABG brands living unbelievable lives outside the U.S. was eye-opening,” Baker said. “That’s why we think we have so much more opportunity.”