Neiman Marcus has reportedly rejected a $3 billion takeover bid from Saks Fifth Avenue.
The two luxury department store chains have been engaged in negotiations for several months but have been unable to agree on the terms of a potential merger, The Wall Street Journal (WSJ) reported Friday (Dec. 1), citing unnamed sources.
Neither Neiman Marcus nor Saks Fifth Avenue immediately replied to PYMNTS’ request for comment.
While a merger could potentially help both companies navigate the challenges of the luxury retail industry, a deal is unlikely to be reached before early next year, according to the report. Negotiations are ongoing.
A merger between Saks and Neiman Marcus could potentially benefit both companies by allowing them to negotiate better terms with suppliers and eliminate duplicate costs, the report said.
Both Neiman Marcus and Saks have faced challenges in recent years, per the report. Neiman Marcus filed for bankruptcy in 2020 but emerged from court protection with less debt. Saks, which is owned by HBC, has delayed payments to suppliers to manage its cash flow. HBC recently raised $340 million through real estate sales to support its retail operations.
The luxury retail landscape has changed over the years, with brands now selling directly to consumers through their own stores and online platforms, according to the report. This has created increased competition for department stores like Neiman Marcus and Saks. Large luxury conglomerates, such as LVMH and Kering, have also gained market power, further impacting the dynamics of the industry.
It was reported in August that while a merger of Neiman Marcus and Saks would likely face antitrust scrutiny because of the companies’ significant presence in the luxury retail market, the companies could argue that their dominance in the market has waned with the rise of eCommerce.
Both Neiman Marcus and Saks experienced a decline in sales compared to last year, the Friday WSJ report said. Neiman Marcus reported an 8% decline in sales to $948 million in the three months ending Oct. 28. Saks also saw a decline in sales, with gross merchandise value declining 11% at Saks.com and physical stores in the three months ending in July.
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