Saks Global in June told analysts that it had mostly smoothed things over with vendors upset by overdue invoices, but the company has failed to follow through on payments that were to commence this summer, according to vendors in communication with sister publication Retail Dive.
In an email sent to Saks’ payables department this week, Sunday Riley Modern Skincare said the retailer’s team had promised the brand would “start obtaining your 12 payment installments in July 2025.” The brand warned it would escalate the matter to its legal department if the account wasn’t settled in full.
“Please understand your account with us is not only severely outstanding but you have failed to follow through with your commitment,” the skin care brand also said.
Representatives of other brands spoke on condition of anonymity. The issues they face include not just inadequate payments but also fear of complaining because the company has implied they could be cut from the roster. One brand has given up on receiving further payment and has stopped shipping to Saks customers.
The department store conglomerate didn’t immediately return Retail Dive’s request for comment.
For several months, Saks’ deteriorating relationships with suppliers have been a red flag for analysts because of their potential to impede inventory procurement and, early in the year, the company took action. On Valentine’s Day, Saks Global CEO Marc Metrick sent suppliers a memo acknowledging an 18-month backlog of unpaid balances and promising payment in monthly installments, starting in July.
Saks Global formed last year out of the $2.7 billion merger of Saks Fifth Avenue and Neiman Marcus and quickly ran into financial difficulty. The company in June announced a $600 million agreement that would fund the important holiday quarter as well as, theoretically, the ongoing back payments.
While the company hasn’t yet defaulted on any of its loan obligations, S&P Global Ratings analysts Frederico Carvalho and Amanda O’Neill deemed that bondholder agreement, which entailed a debt exchange and retiering of outstanding senior secured notes, “tantamount to a default.” They also flagged its vendor problems, as they had in previous reports.
“A disruption in Saks’ inventory flow has led to a pronounced deterioration in its operating performance and liquidity challenges,” they said. “We believe the company’s market position will weaken as competitors with greater financial capacity expand their business operations.”
In July, Saks Global reported a 16% year-on-year revenue decline to $1.6 billion. Gross profit margin was flat at 44%, as net loss widened by 38% to $232 million. Quarter-end inventories were $2.1 billion, while gross merchandise value fell 13% to $2 billion.
