Podcast Summary: Fashion People – "Inside the Saks Saga"

Host: Lauren Sherman (Puck)
Guest: William D. Cohan (Finance Journalist, Puck's "Dry Powder")
Date: January 9, 2026

Episode Overview

This episode goes deep on the year-long drama engulfing America’s luxury department store giants as they merge under the Saks Global umbrella. Lauren Sherman and Bill Cohan dissect how the group’s 2025 acquisition of Neiman Marcus Group—joining Neiman Marcus, Saks Fifth Avenue, and Bergdorf Goodman—became a cautionary tale of retail finance, over-leverage, and existential questions about the department store model. They break down the red flags, why the debt-fueled deal went off the rails, why the model may never work again, and what bankruptcy and restructuring could mean for the fashion industry and the future of these retail icons.

Tone: Conversational, insider-y, candid, and analytical.

Key Discussion Points & Insights

1. The Saks Global-Neiman Marcus Deal: Origins & Logic

[06:22]

• Genesis: Richard Baker (owner of Saks) had wanted to unite Saks and Neiman Marcus for 15 years. The consolidation was seen as inevitable by many in fashion.
  • Lauran Sherman: "This is like an inevitability. The consolidation of these, the two biggest luxury department stores in America was inevitable in many people's eyes."
• Strategic Logic: The logic made sense, but execution hinged on its financing structure.

2. The Debt Structure – Red Flags from Day One

[07:43]

• Financing: Deal financed mostly with debt—a $2.2 billion publicly traded junk bond with an 11% coupon.
• Wall Street Demand: High interest attracted institutional investors, despite retail sector headwinds.
• Bond Downturn: Shortly after closure, the bond began trading down (from $1 to $0.75), triggering alarm bells on Wall Street.

Cohan: "As soon as retailers start stretching payables...you know, a big, big red flag from the financial community." — [09:26]

3. Stretching Payables & Retail’s Fundamental Flaws

[09:26 / 10:30]

• Delayed Payments: Stretching vendor payables from 30 to 90 days was the first warning sign.
• Retail Model Problems: Sherman observes chronic late payments as a known, systemic issue in department store retail:
  • Sherman: "This model doesn't work...you cannot have this many stores. You have one bad season...you get behind."
• Analogy: This is not new. Comparable issues led to the collapse of stores like Barneys.

4. Bankruptcy Pattern Recognition

[14:54 / 20:03]

• Market Signals: Cohan walks through how the bond's price collapse and missing performance targets signaled troubles:
  • "A bond that trades publicly...is a very important point...bondholders said 'I gotta get out of this.'"
• Insider Insight: The lack of required public financial filings created opacity for investors, but behind the scenes, missed promises and deteriorating financials became clear to those who found the private filings and bond prospectus.

5. The Death of the Department Store (and the Wholesale Model)

[21:05 / 22:55]

• Historical Perspective: Sherman traces decline back to rise of specialty retail and direct-to-consumer models—a shift since the late 1970s and 80s.
  • Sherman: "If you look at how much stuff was bought at department stores in 1975 versus 1985, it's shocking."
• Experience-Driven: Consumers may enjoy stores, but operational scale at this level is unsustainable.
• Real Estate Reality: Baker’s background is in real estate deals, not retail innovation. Hudson’s Bay (the oldest North American retailer, also owned by Baker) liquidated in 2025.

6. Why Restructuring—Not Bailouts—Is Next

[29:36 / 32:26]

• Operational Paralysis: As bankruptcy loomed, key leaders left, and communication with vendors evaporated.
• DIP Financing: Explains "debtor-in-possession" (DIP) as new financing that lets vendors ship and business continue post-bankruptcy, but notes delays and vendor skittishness:
  • Cohan: "They have a 30 day grace period on the bond...which they're probably using...to get their house in order." — [32:26]
• Vendor Impact: Over $500 million owed to vendors; shipments halted; Chanel pulled out first.

7. Liquidation Is a Real Possibility

[38:36 / 39:21]

• Risk: If DIP financing can't be secured, outright liquidation is possible—"just like Hudson Bay" and Barneys.
  • Cohan: "Of course there's a scenario where they don't get DIP financing and they go into liquidation. Just like Hudson Bay."

8. What the Restructured Future Might Look Like

[45:01]

• Debt Conversion: Cohan prescribes converting the junk bond debt to equity—creditors, not original equity holders like Amazon or private equity, become the new owners.
• Store Closures: To survive, Saks Global would need to "close non-performing stores and just completely rationalize the business."
• Strategic Asset Sales: Potential for Bergdorf Goodman to be sold off, e.g., to LVMH or another luxury player, if top dollar is offered post-bankruptcy.

9. Macro Lessons and Creative Destruction

[51:32]

• Market’s Ruthlessness: Sherman and Cohan discuss "creative destruction"—the inevitable churn as outdated retail concepts die and new ones emerge.
  • Cohan: "It goes back to Joseph Schumpeter and creative destruction. And that's where we are in the retail industry. And capitalism can be very ruthless."

Notable Quotes & Moments (with Timestamps)

• The deal’s fatal flaw:
  Cohan: “If they had used all equity, we wouldn't be sitting here talking about it today.” [07:43]
• Retailer red flags:
  Cohan: “As soon as retailers start stretching payables...that's a big, big red flag.” [09:26]
• Cultural transition:
  Sherman: "The fashion industry is increasingly not reliant on this model...Most sales of products in luxury are sold direct to consumer." [20:03]
• Missed opportunity for drastic action:
  Sherman: "When Neiman Marcus went bankrupt...the thing they did wrong was they didn't close enough stores." [25:56]
• Potential scenario if DIP isn’t secured:
  Cohan: “Of course there's a scenario where they don't get DIP financing and they go into liquidation. Just like Hudson Bay. How sad is it that Hudson Bay went into liquidation?” [39:21]
• How to fix Saks Global:
  Cohan: "You've got to convert the bulk of that...bond debt to equity. All those creditors become the new equity holders...and close stores, close non-performing stores and just completely rationalize the business down." [45:01]
• On selling off Bergdorf Goodman:
  Cohan: “If I were Bernard Arnault…this is the perfect opportunity to buy it.” [48:40]
• Big picture view:
  Cohan: “It goes back to Joseph Schumpeter and creative destruction. And that's where we are in the retail industry. And capitalism can be very ruthless.” [51:32]

Important Segments & Timestamps

• Background and Structure of Saks-Neiman Merger [05:07 – 07:43]
• Red Flags: Junk Bonds & Stretching Payables [07:43 – 10:30]
• Explaining Retail Bankruptcy Cycles [14:48 – 20:03]
• History and Fall of the Department Store Model [21:05 – 24:21]
• Bankruptcy Mechanics/DIP Financing Explained [29:36 – 36:42]
• What Liquidation Would Mean for Fashion [38:36 – 40:43]
• Restructuring Scenario & Advice [45:01 – 46:35]
• Bergdorf Goodman: Carve-Out or Acquisition? [46:35 – 49:56]
• Creative Destruction and the Future [51:32 – END]

Closing Reflection

Sherman and Cohan offer a sobering, clear-eyed view of Saks Global as emblematic of the broader reckoning facing the US department store. The episode moves from inside scoop and wall-to-wall finance nerdery to broader business lessons, closing on a call to let creative destruction play out so the next chapter of fashion retail can begin.

Sherman: "I think these places should close and then new things should open and just like, evolve. But that's just not how, you know..."

Cohan: "And capitalism can be very ruthless. And this will sort itself out and the market will get what the market wants." [51:32]

For anyone following the retail world, this is an essential, real-talk primer on how the old luxury model finally broke down—and what must happen next.