SAKS FIFTH AVENUE SPLITS FROM E-COMMERCE BUSINESS

Saks Fifth Avenue owner HBC is splitting up the luxury retailer’s in-store and online businesses.

Under a new partnership with Insight Partners, Saks Fifth Avenue’s e-commerce business will operate as a standalone company, which will simply 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, HBC believes that Saks and SFA will be better able to appropriately plan for and invest in their respective service models.

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.

“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,” said Richard Baker, governor, executive chairman, and CEO of HBC. “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.”

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 aim to 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.

“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,” added Deven Parekh, managing director of Insight Partners. “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.”

As for the in-store team, 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.”