11 Mar Saks Fifth Avenue Stores And E-Commerce To Become Separate Companies
The Hudson’s Bay Company, owners of Saks Fifth Avenue, signed a deal to sell a minority stake in Saks Fifth Avenue’s e-commerce business and turn it into a separate company.
Saks Fifth Avenue’s e-commerce business as a standalone entity, which will be known as Saks. Insight Partners has made a $500 million minority equity investment in Saks, valuing the business at $2 billion.
The retailer’s 40-store fleet will operate separately as an entity referred to as SFA, which remains wholly owned by HBC. As separate but related sister companies, Saks and SFA will be better able to appropriately plan for and invest in their respective service models.
HBC’s Governor, executive chairman and CEO, Richard Baker said, “Luxury e-commerce is poised for exponential growth, and as a standalone digital company with an existing strong position in luxury, Saks is primed to win significant market share. With this move, we are redefining the luxury shopping ecosystem, supercharged by an enviable customer base, incomparable brand equity, long-standing relationships with top designers, and exquisite stores in top markets across North America. The team’s fashion expertise combined with a renewed digital focus will provide customers with an unmatched shopping experience. Furthermore, this transaction reinforces HBC’s ability to unlock significant value within our company’s assets. We are delighted to partner with Insight Partners, a firm globally recognized for its ability to scale Internet, software and e-commerce leaders, to unleash Saks’ full potential as the preeminent luxury e-commerce platform.”
Accelerating Saks’ Growth as a Luxury Ecommerce Platform
Marc Metrick, previously president and CEO of Saks Fifth Avenue, will serve as CEO of Saks and a member of the company’s board of directors.
Under his leadership, Saks will make strategic investments to evolve and expand its online experience. These investments will bolster Saks’ already well-established digital business, starting with strengthening its service model through elevated styling capabilities and data-driven personalization. Ultimately, Saks will feature a hybrid retail and marketplace platform, expanding its assortment while maintaining a curated experience.
Baker continued, “Marc’s leadership of Saks Fifth Avenue over the past several years drove a total transformation of the brand and customer experience. His efforts, along with those of his expert management team, enabled the business to generate industry-leading top-line growth and impressive market penetration. With this, I am confident that he will bring this same innovative leadership to Saks as it embarks on its journey as a standalone e-commerce company.”
Metrick said, “For nearly a century, our customers have loved and trusted the Saks Fifth Avenue shopping experience, cementing the brand as a leading fashion authority and setting the bar in luxury retail. As a standalone company, we are well-positioned to make the appropriate investments to drive exponential growth and deliver the same exceptional experience online. We are energized by the opportunities that lie ahead for our customers and our vendor partners. This is a pivotal beginning of Saks’ next one hundred years as a leading luxury retailer.”
With Saks’ transition to an e-commerce business, Sebastian Gunningham will join the company’s board of directors and serve as an advisor. Gunningham was previously a member of the executive team at Amazon and led its marketplace expansion, among other large technology and operational divisions at the company. He has also held executive roles at Apple and Oracle, along with other leadership roles at world-class enterprises.
Insight Partners’ managing director, Deven Parekh added, “Luxury e-commerce is an exceptionally resilient high-growth sector and we are excited to invest in an iconic century-old brand that has so successfully morphed to a native digital strategy. Saks has thrived by continuously reinventing itself but by also staying close to its strategy of being the premier partner of choice of so many leading global brands. We look forward to partnering with Marc and the rest of his management team as they continue to expand their global customer base and become the defining company in luxury e-commerce.”
Stores to Remain Key Customer Touchpoint
Saks Fifth Avenue will remain as the customer-facing name for both businesses. Saks and SFA will work in conjunction to continue delivering a seamless customer experience. Returns, exchanges and SaksFirst credit cards will continue to be accepted both online and in stores.
Saks will lead marketing and merchandising across both businesses, while the stores will fulfill the physical functions of Saks, such as Buy Online, Pick Up In-Store, exchanges, returns and alterations. Saks will retain ownership and control of the Saks Fifth Avenue intellectual property, including the brand and visual identity.
Larry Bruce has been appointed president of SFA and will report directly to Baker. Bruce has been with Saks Fifth Avenue for nearly 20 years and has served for the past eight years as Director of Stores.
Metrick added, “The Saks Fifth Avenue brand is rooted in delivering the best in fashion and beauty. Saks’ expanding online presence will drive brand awareness while the physical locations will continue to serve as an important customer touchpoint. I am certain that Larry is the right leader to continue driving the store fleet into the future. We look forward to maintaining a symbiotic relationship and working together to provide a seamless customer experience across all channels.”
Rhône Capital, a significant shareholder of HBC, was actively involved in the transaction.
Franz-Ferdinand Buerstedde, managing director, Rhône Capital, said, “There is great potential in businesses that operate at the intersection of retail, technology and real estate. We are pleased to see this transaction come to fruition and are confident it will lead to significant value creation. The strategy to expand Saks’ e-commerce offering while continuing to serve customers through its well-positioned store locations will be mutually beneficial and further solidify the Saks Fifth Avenue brand as the true leader in luxury retail.”