Saks Global Gets Court Approval for Bankruptcy Restructuring

Saks Global received court approval for its bankruptcy restructuring on Friday, clearing the luxury ​retailer to exit from Chapter 11 with a smaller store footprint ‌and lower debt. U.S. Bankruptcy Judge Alfredo Perez approved the company's Chapter 11 plan at a court hearing in Houston, saying the company had done an "extraordinary" job in stabilizing its business after a ​rocky start to its bankruptcy in January. Saks Global will emerge with 49 luxury retail locations, including 33 Neiman Marcus stores, 15 Saks Fifth Avenue ​stores, and Bergdorf Goodman. Saks Global entered bankruptcy with 33 Saks Fifth Avenue ​locations.

Total Retail's Take: While court approval of its bankruptcy restructuring is a step in the right direction, Saks Global must still execute upon on the plan and emerge from Chapter 11 in the coming weeks. The company says it will eliminate roughly 75 percent of its debt, which was the core problem that pushed it into bankruptcy after the Neiman Marcus acquisition. Going forward, Saks Global will have a smaller physical footprint, eschewing a higher volume of stores for a more focused approach on flagship luxury locations in top-performing markets. Furthermore, the retailer will seek to grow its e-commerce sales, again with a focus on premium, luxury products.

The focus for Saks Global going forward will be to stabilize operations, rebuild trust with its vendor community, improve profitability through a more streamlined store fleet, and grow selectively in categories where it has an established presence. This court ruling buys the retailer some time to act on those initiatives.