How Saks Fifth Avenue collapsed

In the early 2020s, Amazon invested $475 million in Saks Fifth Avenue. Just 2 years later, they went into bankruptcy court and basically told the judge that they considered their investment entirely worthless. They were super pissed. They had been promised a great return on their money and suddenly they'd lost it all. In July 2024, Saks Fifth Avenue announced a massive deal. They were combining themselves with Neiman Marcus to create Saks Global. They basically like a global powerhouse in the field of luxury retail. Amazon invested $475 million. Salesforce, they put in money too. The whole vision was that you would have luxury digitized online e-commerce. On paper, it looked like an amazing combination. You had the foremost brands in luxury combining with tech powerhouses. But there was one problem that nobody was talking about. Saks Fifth Avenue was already drowning. Behind the scenes, Saks had already entered basically what is a real estate death spiral. Your vendors think you're not gonna be solvent in the future, so they stop shipping you more goods, which makes your problems with cash flow and sales even worse. And remember, the folks that supply Saks Fifth Avenue, it ain't Hanes, like it's Dolce Gabbana, Versace, LVMH. These are the people that are shipping them high-end goods sold at high-end prices. Estée Lauder reportedly stopped sending Saks, one of the most storied brands and luxury retailer, stuff on credit during this period of time. Supposedly over half of their invoices Employees from Saks were being paid over 90 days late at this period of time. And yet Richard Baker, the man who is the real estate king, uh, who owns Saks at this time, decided this was the perfect time to take out $2.2 billion in debt to combine them with struggling retailer Neiman Marcus. The deal closed on New Year's Eve, 2024. And the death spiral? The death spiral meant fewer products being sold, customers not coming in, uh, bad reviews. Wasn't pretty. And within a few months into 2025, investors saw this happening and all that debt that had been sold to bondholders in order to finance the transaction, it was being priced like people expected the company not to survive. Dozens of vendors sued them. They supposedly owed Estée Lauder over $130 million. One brand kind of distributor of all this kind of stuff called Hudlin Corporation, who handles over 14 brands and $500 million in sales through Saks. They stopped sending merchandise to the company as well. By December 2025, nearly half of bills that Saks owed were over 90 days late. And in early January 2026, they missed a $100 million debt payment. They filed bankruptcy. They went into bankruptcy court and told the judge that they considered their investment basically worthless at that point. $475 million bucks gone in less than 2 years. In the end, the story is one of vision not matching reality and diligence and understanding the deal you're investing in, especially if you're, even if you're Amazon, is super duper important. I covered this whole story in a long-form video on my channel. If you're interested, we'll put a link below. Check you soon.