Upscale clothing chains Saks Fifth Avenue and Neiman Marcus could soon join forces and receive financial support from Amazon.com Inc., a report said Wednesday, as luxury brands consolidate in the face of falling demand.
This According to the Wall Street Journal that investment and holding company HBC, which bought Saks Fifth Avenue more than a decade ago, has reached a $2.65 billion deal to buy Neiman Marcus, creating a novel company to be called Saks Global. The Journal reported that the boards of both companies had signed off on the acquisition and that an official announcement could come “as early as tonight.”
The magazine wrote that Amazon AMZN,
and Salesforce Inc. CRM,
we would be minority shareholders in this company and provide advice on logistics, technology and AI implementation.
Amazon declined to comment. HBC, Neiman Marcus and Salesforce did not immediately respond to requests for comment.
Two years of higher prices for basic necessities have disrupted luxury shopping and more broadly lower-priced clothing and home furnishings purchases. Analysts say wealthier shoppers were better positioned to buy more steep goods.
However, sales in the power of luxury brands LVMH Moët Hennessy Louis Vuitton MC,
fell 2% in the first quarter but rose slightly in constant currency. Management noted “a geopolitical and economic environment that remains uncertain.” Elsewhere in the industry, regulators have taken a firmer stance on consolidation.
Older fashion players also face a backdrop in which rapid fashion and online influencers have accelerated the rate at which trends go in and out of fashion, forcing everyone else to release novel products faster. Meanwhile, fakes and knockoffs have become easier to produce and sell online.
According to the Journal, HBC has committed $2 billion for the deal from investors including Rhône Capital, Abu Dhabi Investment Council and NRDC Equity Partners, a private equity firm overseen by HBC’s executive chairman. According to the Journal, Apollo Global Management Inc. APO,
$1.15 billion was invested in debt financing.