Saks Global's Q2 performance impacted by inventory issues

According to WWD, Saks Global reported a decline in both revenue and profit for the second quarter, weighed down by persistent inventory challenges and higher operating costs. For the quarter ended August 2, revenue dropped 11.1 percent to 1.6 billion dollars, while gross merchandise value slipped to 2 billion dollars.

The company's net loss widened to 288 million dollars, compared to the prior-year period, when Saks Fifth Avenue and Neiman Marcus operated as separate entities. Adjusted losses before interest, taxes, depreciation and amortization rose to 77 million dollars, driven primarily by weaker business performance and a higher proportion of fixed expenses on reduced sales volumes.

Marc Metrick, chief executive officer of Saks Global Operating Group, attributed the softer results to inventory issues that continued into the third quarter but noted resilience in the company’s concession business, which remains supported by strong luxury demand. He told WWD: “With receipt flow improving and the ongoing relative strength of our concession business, we continue to see evidence that when inventory is present, we see improvements in the top line.” He added that inventory levels are expected to normalise through the holiday season and into 2026, supporting stronger sales ahead.

Saks’ 2.7 billion dollars acquisition of Neiman Marcus Group in December has significantly expanded its footprint in U.S. luxury retail, bringing together brands such as Saks Fifth Avenue, Neiman Marcus, Bergdorf Goodman, Saks Off 5th, Last Call and Horchow. Despite the near-term financial strain, the company reported progress in capturing merger-related synergies. Metrick said the company remains on track to deliver over 200 million dollars in cost savings in fiscal 2025 and aims to reach an annualised synergy target of 600 million dollars in the coming years.

In an interview with WWD, Metrick elaborated that most of the savings stem from technology integrations, renegotiated contracts with carriers, reduced headcount, and consolidation of fulfilment centres—from six to three—allowing Saks to take direct control of operations previously managed by third parties. He also pointed to the creation of a central buying team for Saks Fifth Avenue and Neiman Marcus, while Bergdorf Goodman retains its own team. “It’s a much more strategic and broader integration than just job reductions,” Metrick emphasised.

However, the acquisition also added significantly to Saks Global’s debt, which totalled 4.7 billion dollars at the end of the quarter, including 1.1 billion dollars in borrowings under its asset-based lending facility, 2.5 billion dollars in senior secured notes, and a 1.25 billion dollars mortgage on its Saks Fifth Avenue flagship. Pro forma debt stood at 4.9 billion dollars following a financing transaction completed in August 2025. The company is exploring strategic options to bolster liquidity, including the potential sale of a minority stake in Bergdorf Goodman. “This is a non-controlling minority interest that we’re looking at,” Metrick told WWD, stressing that the move aims to strengthen the balance sheet without altering the company’s long-term plans for the iconic retailer.

While sales were weaker than expected in the quarter, concession business performance improved, signalling demand among luxury shoppers. Gross profit margin stood at 37.9 percent of revenues, down slightly from the previous year due to seasonal markdowns and promotional activity.

Despite near-term headwinds, Metrick remained cautiously optimistic about the outlook, saying, “We’re expecting our holiday sales to be better than what you’ve seen year to date. They will certainly be positive. The inventory is going to be in a much better position than it’s been in over the last several quarters as we come into holiday.”