Saks in Talks to Sell 49% of Bergdorf Goodman for About $1 Billion
The department-store operator intends to use the proceeds to pay down debt after last year’s acquisition of Neiman Marcus
- Saks Global is considering selling 49% of Bergdorf Goodman for about $1 billion to unlock value and reduce debt.
- Potential buyers for the stake in Bergdorf Goodman include Middle Eastern sovereign-wealth funds and strategic investors.
- Bergdorf Goodman, known for luxury goods and superior service, might be valued between $1.5 billion and $2.5 billion.
The parent of Saks Fifth Avenue is in talks to sell 49% of Bergdorf Goodman, the ultraluxury department store, for about $1 billion, according to people familiar with the situation.
There are at least four potential bidders, including Middle Eastern sovereign-wealth funds and strategic investors, the people said. A deal could come as soon as early next year.
“We have initiated a strategic process to explore the potential sale of a minority stake in Bergdorf Goodman,” said Richard Baker, executive chairman of Saks Global. “While Bergdorf Goodman is core to our strategy, this process is intended to unlock value for our stakeholders and de-lever our business.”
Saks Global, which acquired the department store when it bought rival Neiman Marcus for $2.7 billion last year, is also in the process of selling $600 million of real estate. It currently owns properties valued at roughly $9 billion, one of the people said.
Bergdorf Goodman is considered the crème de la crème of department stores. It is known for its superior service, selection of high-end goods from Chanel and Hermès, as well as its iconic location on the site of the former mansion of Cornelius Vanderbilt II on Manhattan’s Fifth Avenue just south of Central Park.
A buyer would receive a stake in the operating company—not its valuable real estate, which is owned by the founding Goodman family.
The store traces its roots to 1899 when Herman Bergdorf, an Alsatian immigrant opened a tailor’s shop near Union Square. Edwin Goodman apprenticed with Bergdorf and the two eventually became partners.
The retailer occupied various locations over the years and moved to its current Beaux-Arts home in 1928. It was sold to the now-defunct Broadway-Hale stores, which also owned Neiman Marcus, in 1972.
Before Neiman was acquired by Saks, it had received an offer from a sovereign-wealth fund to buy all of Bergdorf Goodman for $1.5 billion, the people familiar with the situation said. The total value of Bergdorf Goodman is currently between $1.5 billion and $2.5 billion, they added.
The merger of Saks and Neiman has faced challenges, including the recent slump in sales of luxury goods. Saks has struggled to pay some vendors. In June, Saks raised $600 million in fresh capital from bondholders.
The combined companies are on track to achieve more than $600 million in synergies by combining back-office functions, including information technology, and reducing overlapping staff.
Baker, a seasoned real-estate executive, has a record of seeing value where others don’t.
A year after buying Saks Fifth Avenue in 2013, the retailer’s flagship Manhattan store was valued at $3.7 billion—more than the $2.9 billion that he paid for all of Saks.
About a decade after acquiring the Lord & Taylor chain, Baker sold its Manhattan flagship to Amazon.com for $1.15 billion. Lord & Taylor was later sold to fashion-rental subscription service LeTote and subsequently filed for bankruptcy in 2020.
Bergdorf Goodman has largely avoided the fate of other department stores, which expanded into the suburbs and diluted what made them special. It continues to operate just two locations: one devoted to women and the other for men, across the street from each other.
The store has appeared in numerous movies, including “How to Marry a Millionaire” and “Arthur,” and was a favorite shopping destination of Carrie Bradshaw on “Sex and the City.”
It was the subject of the 2013 documentary “Scatter My Ashes at Bergdorf’s,” which featured testimonials from celebrities and designers. In one anecdote, a former fur buyer for the store describes how he brought trunks of furs to Yoko Ono and John Lennon’s apartment in the Dakota building on Christmas Eve so they could buy gifts for themselves and family. The couple bought nearly 80 furs.