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Amazon is an investor in the deal, as the giant e-tailer aims to expand its luxury foothold.

What’s the fallout from the Saks-Neiman Marcus combination?

After a years-long pursuit, and endless speculation, Richard Baker’s Hudson’s Bay Co. has reached a definitive agreement to buy the Neiman Marcus Group for a total enterprise value of $2.65 billion, bringing the Dallas-based luxury retailer together with the New York-based Saks Fifth Avenue.

“I’m very excited. We’ve worked on this for over a decade,” Baker, HBC’s executive chairman and chief executive officer, told WWD on Wednesday evening, confirming earlier media reports that day on the deal. “We’ve had many discussions to buy Neiman’s at much larger numbers. It was too expensive before. It didn’t make sense. The pandemic happened. Neiman’s went bankrupt, but we finally got to a point where we were able to come to terms and do what we think is the right thing for everyone.”

In a digital age twist, Amazon is an investor in the deal, as is private equity giant Apollo as well as Salesforce.

Upon the close of the transaction, HBC will establish Saks Global, a combination of luxury-oriented retail and real estate assets, including Saks Fifth Avenue, Saks Off 5th, Neiman Marcus and Bergdorf Goodman, each of which will continue to operate under their respective brands.

Marc Metrick, currently CEO of Saks, will be CEO of Saks Global.

Baker said that he was not ready yet to discuss other management changes or structure. “We will be surveying and understanding all the talent that exists in all three businesses to put together a best-in-class team,” Baker said, referring to Neiman Marcus, Bergdorf Goodman and Saks.

Baker would not comment on the future of Geoffroy van Raemdonck, CEO of the Neiman Marcus Group. There is some question whether he will be part of Saks Global.

According to Baker, Saks Global generates $10 billion in sales, with Saks accounting for about $6 billion in sales and Neiman’s, $4 billion. He also said that Neiman’s volume has declined from 2013, when it generated $4.9 billion in sales at the time of its $6 billion purchase by Ares Management and the Canada Pension Plan Investment Board. In 2013, Saks Fifth Avenue generated $3 billion in volume, he said. Neiman’s went in and out of bankruptcy in 2020, through a debt for equity swap with Pimco, Davidson Kempner Capital Management and Sixth Street.

Based on the $6 billion purchase price in 2013, and very recent speculation that the price tag on Neiman’s would exceed $3 billion, it appears that Saks, at the $2.65 billion price, got a good deal. Baker would not comment on that, though he has a reputation for never overspending to acquire retail.

Saks Global will also include HBC’s U.S. real estate assets and Neiman Marcus Group’s real estate assets, creating a $7 billion portfolio of retail real estate assets in top-tier luxury shopping destinations. Ian Putnam, currently president and CEO of HBC Properties and Investments, will become CEO of Saks Global Properties and Investments. Metrick and Putnam will report to Baker, who becomes executive chairman of Saks Global.

Also, HBC’s Canadian business, which includes TheBay.com, the Hudson’s Bay department stores, and $2 billion in real estate, will be recapitalized and stay separate from Saks Global, with “significantly reduced leverage and enhanced liquidity,” the company said.

The purchase price is expected to be funded by a combination of equity capital from new and existing. shareholders and debt. Amazon will work with Saks Global to “innovate on behalf of customers and brand partners following the close of the transaction,” HBC said. That could involve logistical and digital upgrades.

The Rhône Capital private equity firm and affiliated investment entities continue as the active lead investor in Saks Global. Global software investor Insight Partners, an investor in Saks.com, will be a shareholder in the new company. Salesforce will also become an investor at closing.

In addition, HBC has secured a $1.15 billion fully committed term loan financing from investment funds and accounts managed by affiliates of Apollo, and a $2 billion fully committed revolving asset based loan facility from Bank of America, the lead underwriter, Citigroup, Morgan Stanley, RBC Capital Markets, and Wells Fargo.

“The transaction deleverages the combined enterprise while ensuring that Saks Global, on a pro forma basis, will have significant liquidity,” HBC said in its statement on the deal.

Saks and Neiman’s have been in talks to merge many times over the years, but the latest negotiations began last summer.

As recently as two weeks ago, sources said the price tag on Neiman’s was $3.1 billion, but at least some of the financial players around the deal were worried about the marriage of two retailers that are still looking to find their footing in a challenging retail climate.

One source said Apollo wanted a coinvestor in the deal to “really pony up and stand side by side with them” — and that’s the role Amazon ultimately played.

The deal would seem to give the e-commerce giant a new foothold in luxury fashion, a space that’s been hard for the “everything store” to navigate despite the launch of the Amazon Luxury Stores platform dedicated to high-end style. However, many observers question whether major luxury labels that sell to Saks and Neiman’s will be willing to have Amazon carry their products since they have resisted the e-tailer’s overtures for years.

“I think it’s their way to try to get into the luxury space and legitimize their entry into luxury,” the source said of Amazon’s involvement.

Chatter over a marriage of the two luxury retailers went into overdrive when HBC bought Saks Fifth Avenue 11 years ago, and Baker instantly made no secret of the fact that he wanted to add the Neiman Marcus Group to the portfolio and create a U.S. luxury retail empire.

There’s a case for putting the two together into one group.

First and foremost, millions of dollars in cost savings would be attained by centralizing and eliminating duplicative functions, such as accounting, planning, human resources, legal and distribution facilities. There could be one online buying team for both retail brands, and further consolidations and savings could involve closing some stores and reducing rents. Ultimately, the headcount could shrink by several hundred, if not by thousands.

But when asked about the possibility of consolidations, Baker replied, “We are not planning on closing stores, or rebranding. We are planning on using our combined resources to better serve customers, for better personalization, better functionality online, to take advantage of AI, and bring more tools to better service our customers. Neiman Marcus has a tremendous sales culture and tremendous stores with fantastic productivity. We have always admired that. So this is a great opportunity.

“It was a shame that, in the past, investment in Neiman’s was not done as robust as it should have been. But at Saks, we spent over $500 million renovating stores and $500 million investing in our digital business. No one in our category of retail has done anything close to this. We are investors in business.”

Secondly, there would be a sharing of data, best practices, management talent and a common customer base. Merging loyalty programs is a possibility. For example, using each retailer’s credit cards to shop could earn points valid at both Saks and Neiman’s. Or spending enough at either store could lead to access to invitation-only events at both Saks and Neiman’s.

Third, there could be a greater differentiation between Saks and Neiman’s, and reduced overlap of merchandise, which is extensive. A former executive at Bergdorf Goodman, which NMG owns, estimated that among the true luxury brands, there’s been about 90 percent overlap. Saks already emphasizes a wider range of categories and price points and has been more aggressive online with the split of the retailer into the online operation Saks and its brick-and-mortar business Saks Fifth Avenue, while Neiman’s has said it is refocusing on its wealthiest customers.

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Inland border facility beset by delays and communication issues as it struggles to implement post-Brexit regime

The UK’s main post-Brexit border control facility is allowing potentially risky animal and plant products to enter the UK without adequate checks, warn customs agents.

Sevington, the post set up by the government to check UK imports after Brexit, has been beset by communication issues and delays as it struggles to implement a controls regime which was delayed five times before finally taking effect in April, the people said.

Goods entering the UK from outside the EU, which previously underwent rigorous physical or documentary inspections, are now entering with weaker checks or none at all, three agents told the Financial Times.

One agent, speaking on condition of anonymity, said he heard that goods from Turkey were being cleared through Sevington. The agent said that when he asked for permission to bring a consignment of honey from Macedonia, the answer was: “Yes, no problem.”

Another official said that six consignments of frozen fish had been cleared through Sevington, a government-run facility, but that their Common Health Entry Documents (CHEDs) that confirm that checks have been carried out had still not been validated weeks later.

“I don’t think that [the inspection] system is turned on, otherwise the system would chuck it back,” he said, adding that he had cleared fish consignments transited through France from China, Korea and Japan through Sevington.

Earlier this year, the FT reported the government had quietly implemented a contingency clearance process designed to reduce lorry queues at British ports.

The measure, known as the timed-out decision contingency feature (Todcof), would allow goods to be automatically cleared after two hours, regardless of whether the checks had been carried out.

Documents showed that, before post-Brexit inspection rules coming into force in April, the rate of checks would be set to their lowest levels or turned off entirely to avoid delays.

In response to concerns that the border system was not fully ready, the government said it had always intended to “phase in” checks.

Before the UK left the EU in January 2020, the country relied on the bloc to carry out controls on goods coming into Europe. The UK carried out its own checks on those arriving from non-EU countries. 

Under the current system, goods entering the UK from both inside and outside Europe can be sent for checks at Sevington, which is 22 miles inland from the port of Dover.

The agent importing fish added that some clients, including hauliers, supermarkets and food producers, had requested their products be routed through a different border control post because they did not trust the capabilities at Sevington. 

Nigel Hughes, an agent at EuroLink customs clearance company said one client had been invoiced for checks at the facility without any proof that these had been carried out.

Another client, which imports plants and trees from the Netherlands, reported its lorry drivers had been forced to spend the night at Sevington because no one was available to carry out checks.

“The main problem that we have with Sevington is the lack of communication,” said Hughes. “We’ve got no-one to speak to. We have mobile phone numbers which don’t answer the phone. We have emails, which are answered very slowly.”

Customs and trade experts have called for a review of the border rules and associated charges, which they say are harming businesses in the UK and on the continent, and endangering biosecurity.

“We need the next UK government to fast-track a veterinary agreement with the EU to do away with unnecessary SPS [sanitary and phytosanitary controls] checks that cripple businesses, are difficult to enforce and apparently do very little to improve food, feed and plant safety and security,” said Arne Mielken, SPS controls expert and managing director of Customs Manager consultancy.

The government said that it could not comment on the matter because of the ongoing general election.

Your go-to fitness choice depends on training, injury history and more

Do you take your fitness journey by land or by sea?

Anyone picking a new exercise routine won’t lack for opinions from among the tens of millions of runners and swimmers in the U.S. There are passionate communities on both sides that will tell you their sport is superior.

Better to ask someone who does both.

“I tolerate swimming to be able to do sports we like, to travel to cool places and race together,” says Jacob Gilden, a 36-year-old competitive triathlete and swimrunner. “But if I was less injury-prone, I would probably be doing a lot less swimming and a lot more running.”

His wife, Liz Gilden, a former professional triathlete herself, also loves running, but the 36-year-old says that age has changed the equation. Swimming isn’t as hard on the body, she says: “We can’t really run as much as we used to. So supplementing swimming really helps preserve that aerobic capacity.”

We all know the basics: Both running and swimming can boost your cardiovascular and mental health. Doing either is generally better than doing nothing.

How to decide which is better for you? We talked to experts to determine the factors—including your training, injury history and natural affinity—that play into the decision.

Born to run

Contrary to popular belief, running doesn’t have to destroy your knees and can actually benefit them. Some exercise scientists and researchers say that, with the proper routines, people can continue running into their 60s and 70s—or maybe even later.

Careful and informed training for a marathon can have a protective effect on knee joints of sedentary people without prior knee pain or issues, according to a pair of published studies from 2019 in the BMJ and 2020 in Skeletal Radiology.

Using magnetic resonance imaging, or MRI, researchers analyzed the knee joints of dozens of middle-aged, first-time marathoners. Many people assume that joints, bones and muscles wear down over time like car parts, says Alister Hart, a professor of orthopedics at University College London and the chief investigator of the studies.

But our body parts are biological, he says. “By doing exercise, they actually repair, renew and improve.”

Because running is a load-bearing exercise, research suggests it can build bone health. “We know that bones respond to force,” Hart says. “Running improves your knees by improving the quality of the bone on either side of the knee joint.”

But runners shouldn’t do anything too vigorous or bear too much weight until their bodies are able to manage. Instead, they should start out with easy runs and gradually increase the intensity and mileage.

“We don’t want someone who’s not conditioned to run to jump into running,” says Laura Richardson, a clinical associate professor of applied exercise science and movement science at the University of Michigan.

That includes people with arthritis and joint pain or those who are recovering from an injury or surgery. They may want to opt for swimming instead of running, researchers say.

“If you had a soccer injury at a young age, and you ruptured your cruciate ligament, and you never had it repaired, you’re going to be running on a joint that’s going to be not moving normally,” Hart says. “Your risk of developing joint damage is real.”

High-water marks

Proponents of swimming point to the fact that it activates muscles throughout your body, while running mainly works the lower body.

And because moving through water can be less harsh on the body than pounding pavement, swimming is often useful for rehabbing from injuries—including overtraining in running—and for those seeking joint-friendly exercise, says Scott Trappe, the director of the Human Performance Laboratory at Ball State University. Regular swimming has been found to reduce joint pain and stiffness associated with osteoarthritis.

Other health benefits have gotten less attention.

Researchers found that masters athletes, including swimmers, cyclists and triathletes—with the average age of 57—had more satisfying sex lives and better sexual function than the general population. The study’s subjects mostly consisted of swimmers but a small percentage of participants took part in other activities such as running and rowing.

“The take-home message is that swimming can enhance sexual function to an older age,” says Hirofumi Tanaka, the director of the Cardiovascular Aging Research Laboratory at the University of Texas at Austin and senior author of the 2023 study, which was published in the International Journal of Sexual Health.

One potential downside of swimming, exercise scientists say, is that it might require more training to get the benefits.

“You have to have a good skill to raise your heart rate up,” Tanaka says.

‘Intrinsic excitement’

Running and swimming can both be physically demanding and even risky, so experts recommend easing into both.

The trick is determining what intensity of an aerobic activity you can maintain in a continuing program, says the University of Michigan’s Richardson. “It’s a matter of finding that sweet spot.”

And when it comes to picking one or the other, the best choice is probably the one that you’ll stick with consistently. “If putting on your shoes and running outside seems like a challenge, then maybe you need to pack your bag and go to a local pool,” Richardson says. “So whatever feels like you have a little intrinsic excitement about doing, that’s the one you’ve got to do.”