Several North American department stores are joining forces under a deal that will see Hudson's Bay Co. buy Neiman Marcus and spin it out into a larger business along with some of its other prestige retailers.
“For years, many in the industry have anticipated this transaction and the benefits it would drive for customers, partners and employees," HBC's executive chairman and chief executive Richard Baker said in a release announcing the deal. The tie-up comes at a critical juncture for both the retail market and luxury brands, which have watched consumers cut back on purchases because of high inflation and interest rates that materialized just as businesses began to recover from the COVID-19 pandemic. At the same time, department stores have fallen out of favour amid the rise of e-commerce and direct-to-consumer sales.
"Bringing Saks and Neiman Marcus together would be something of a marriage of convenience," Neil Saunders, managing director of GlobalData, said in a note Wednesday when U.S. publications reported a deal had been reached. Uniting them could deliver more "financial firepower" to negotiate with luxury brands and cut out duplicative costs, said Saunders, but "a merger does not resolve all the issues.
Liza Amlani, co-founder of the Retail Strategy Group, predicted the transaction will result in HBC shrinking its footprint. Saks Global, meanwhile, will have control over US$7 billion in real estate assets owned by HBC’s U.S. division and Neiman Marcus Group.
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