After 150-plus years, Saks Fifth Avenue’s house has crumbled, leaving luxury beauty brands that depended on it for positioning and distribution in a precarious position.
The luxury department store has filed for Chapter 11 bankruptcy, less than two years after its parent company HBC acquired Neiman Marcus and Bergdorf Goodman for $2.6 billion. Financed by $2.2 billion in debt, the acquisition combined some of the biggest names in luxury retail under a newly formed group called Saks Global, but it put Saks under tremendous financial strain, a weight the company has tried to lift by selling off prized real estate properties to the highest bidder.
In December, it sold the land under Neiman Marcus’s Beverly Hills flagship store for an undisclosed amount. It’s also set to make a similar move with another Neiman Marcus flagship store in San Francisco.
Saks’ attempts to alleviate its debt load were futile. It missed a $100 million interest payment to bondholders in late December and has now secured $1.75 billion in debtor-in-possession financing from creditors to keep its business afloat during bankruptcy proceedings. Its assets and liabilities are estimated to be in the range of $1 billion to $10 billion, according to the filing.
In the wake of the upheaval, former Neiman Marcus Group CEO Geoffrey van Raemdonck stepped into the role of Saks Global CEO on Tuesday. He succeeds real estate mogul and Saks executive chairman Richard Baker, who held the role for less than two weeks after Marc Metrick departed on Jan. 2 following a 30-year tenure at the company. A key architect in the union of Saks and Neiman Marcus, Baker has exited the company entirely.
While Saks’ ill-fated acquisition may have pushed the storied retailer over the edge, it’s not entirely to blame for its troubles. Saks and the broader department store industry in the United States have been under pressure for decades as e-commerce ate into brick-and-mortar retail and indoor malls lost relevance. Reports of unpaid vendor bills surfaced as far back as 2023, and Saks currently owes hundreds of millions of dollars.
According to global investment bank TD Cowen, Saks and Neiman Marcus accounted for just 1% of total beauty retail market share combined in 2023, and their share is projected to remain flat through 2030. Comparatively, the market share of online platforms like Amazon and TikTok Shop is predicted to grow by 6% and 3% over the next seven years, respectively.
Despite their losses, department stores have been making investments to claw back beauty spending. Last year, Macy’s and Nordstrom unveiled refurbished beauty halls with increased square footage for new brands, fixtures and services. Bloomingdale’s, Nordstrom and Dillard’s are arguably the brightest spots in the department store market and are poised for modest growth this year, while Kohl’s, Macy’s and J.C. Penney continue to tread water.
As Saks enters bankruptcy, we want to explore the implications for luxury beauty brands. For the latest edition of our ongoing series posing questions related to indie beauty, we asked 10 retail consultants, analysts and investors the following questions: What does the implosion of luxury retail stalwarts Saks, Neiman Marcus and Bergdorf Goodman mean for the luxury beauty market? What could emerge or has already emerged to take their place? Or, are these retailers simply irreplaceable?
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Kelly St. John Founder and CEO, KSJ Collective The implosion of Saks Global marks more than the unraveling of a legacy retail group. It signals the end of a very specific luxury distribution era for beauty. For decades, Saks, Neiman Marcus and Bergdorf Goodman functioned as cultural validators for prestige and luxury beauty brands. They weren’t just sales channels; they were symbols of legitimacy, aspiration and scale. When a brand landed on those floors, it signaled arrival.
But that model depended on a healthy balance between retailer ambition and financial discipline, something that quietly eroded over time. Long payment terms and increasing inventory risk pushed onto brands created fragility that brands are now paying the price for.
From an advisory standpoint today, the most striking thing about the Saks Global implosion is how misaligned the old retail model has become with the way modern luxury beauty brands actually grow. Luxury beauty no longer needs department stores as the primary gatekeepers of status or growth. They need flexibility, cash flow predictability, selective distribution and partners that add value beyond square footage.
Are Saks, Neiman Marcus and Bergdorf Goodman irreplaceable? No, but what they represented hasn’t been replaced and will not be replaced by any one player. Instead, their role has fractured.
Sephora and Ulta have absorbed much of the scale and discovery engine for beauty. Specialty and ultra-curated platforms like Violet Grey, Space NK and high-touch independents now deliver the credibility and storytelling that department stores once owned. Meanwhile, brand-owned flagships and experiential retail give brands something department stores never fully could: control.
What’s arguably more important is the shift in power dynamics. Department stores once offered scale and prestige, but at the cost of margin pressure, long payment terms and operational risk, issues that have become painfully visible in the Saks Global collapse. When retailers stop being brand builders and start functioning as balance-sheet levers, the relationship breaks down.
The future of luxury beauty retail isn’t about finding the next Saks. It’s about building a diversified, disciplined distribution ecosystem where no single retailer can put a brand at existential risk. Luxury beauty will continue to thrive, but it will do so on its own terms, with control, agility and financial discipline taking precedence over legacy validation.
- Denise Gorant Fractional Marketing and Brand Consultant
The implosion of these retailers is less about the loss of department stores and more about the loss of infrastructure. Luxury beauty depended on these retailers for physical space, well-trained staff and a consumer environment reliant on education and discovery. That system is breaking down.
For luxury brands, there isn’t another retailer positioned to replace what Saks Global represents. What’s emerging instead is fragmentation of brand-owned stores, direct-to-consumer and specialty retail options, but none of those channels offer scale, discovery and credibility at the same time.
Sephora and Ulta are effective businesses, but they’re optimized for speed and volume. Luxury skincare and fragrance don’t perform best in high-velocity environments; they require time, explanation, sampling and human expertise.
Brand-owned flagships work for the most capitalized players; maybe, but they don’t function as an ecosystem. Without a multi-brand luxury platform, emerging and mid-sized brands lose visibility and innovation becomes harder to finance. At the same time, a forgotten element, highly trained beauty advisors and educators are being displaced, and that expertise is directly tied to conversion and long-term brand loyalty.
Saks, Neiman Marcus and Bergdorf Goodman may have been financially mismanaged, but their role hasn’t been replaced. Until a beauty-first retail model emerges that supports education, service and long-term brand building at scale, luxury beauty would be operating without a center. The uncomfortable truth is that luxury beauty didn’t lose where it sold, it lost why it worked.
- Rich Gersten Co-Founder and Managing Partner, True Beauty Ventures
The department store channel has faced structural pressure for years. The current situation at Saks, Neiman Marcus and Bergdorf Goodman reflects long-standing challenges rather than a sudden shock. Declining traffic, weaker economics and growing payment risk have steadily eroded the value of department stores as a growth engine for luxury beauty.
Historically, department stores anchored luxury beauty distribution. Today, they struggle to deliver growth. That reality has pushed smart luxury brands to diversify early and reduce reliance on a channel that no longer compounds brand equity or profitability.
What has filled the gap is a more fragmented but more resilient mix of channels. Direct-to-consumer (DTC) has emerged as the most attractive alternative for many luxury beauty brands. Categories with high average order value (AOV), low product weight, strong gross margins and repeat purchase behavior lend themselves particularly well to DTC. These brands can support higher customer acquisition costs (CAC), remain first-order profitable and still generate compelling lifetime value (LTV) to CAC over time. Just as important, DTC allows brands to control storytelling, data and the full consumer experience.
Curated luxury specialty retailers like Cos Bar, Violet Grey, Bluemercury, and, to a lesser extent, Space NK, continue to play an important role. They offer high-touch environments, knowledgeable staff and authentic brand education. The trade-off is scale. These doors matter for brand building, but they rarely provide the distribution breadth needed to drive outsized revenue on their own.
Sephora and Ulta remain the only U.S. prestige wholesale partners capable of delivering true scale in beauty. Sephora has increased its focus on luxury through selective launches such as U Beauty. That said, the luxury strategy is still evolving, and it remains unclear whether Sephora or Ulta can consistently capture the traditional department store luxury shopper at scale.
Amazon has also become a viable channel for luxury beauty. Massive reach, best-in-class logistics and replenishment convenience increasingly outweigh historical brand concerns. Gated storefronts, curated assortments, and elevated merchandising allow brands to maintain control while benefiting from the platform’s efficiency. In parallel, many luxury brands are investing in flagship stores and boutiques. These spaces prioritize immersion, education and trial, which remain critical for converting consumers at higher price points.
The real risk is not losing Saks or Neiman Marcus. The real risk is being stuck there. Brands that remain heavily dependent on department store wholesale face declining traffic and heightened payment risk. The winners have already built strong DTC engines and paired them with selective retail partnerships that reinforce brand equity and profitability.
At True Beauty Ventures, we have not yet invested in a high-priced luxury skincare brand despite evaluating many. Our focus remains on scaling brands through wholesale channels. That said, the broader unraveling of the Saks Group only reinforces a core belief, even for luxury. A digital-first strategy is no longer optional. It is foundational.
- Ashleigh Barker Head of Beauty and Personal Care, Lincoln International
The situation facing Saks Global has loomed for some time and isn’t the result of a single catalyst, but rather the culmination of many factors observed over the years. Internally, the luxury department store group was over-levered to support the Neiman Marcus Group acquisition. Externally, inflation and economic uncertainty have slowed in-store foot traffic coupled with a decline in discretionary spending.
There has also been a notable shift in how luxury goods are bought, sold and discovered. Even in a better economy, the department store no longer serves as the gatekeeper of luxury and prestige beauty. Consumers discover brands through founders, social channels and other community platforms long before they walk into a store.
At the same time, wholesale economics are challenging, making department stores less attractive, especially for emerging brands who seek more curated distribution channels to leverage customer relationships and maintain a level of storytelling for brand discovery.
Instead of a single channel or retail group replacing Saks Global, a more fragmented but healthier ecosystem is being realized. Direct-to-consumer selling is essential, while specialty retailers (like Cos Bar and Bluemercury) and other curated digital platforms (like Violet Grey and even Amazon) are increasingly putting energy behind prestige beauty, offering more education and credibility for brands.
This is not to say that department stores are going away, as they will continue to matter for large global brands. But for luxury beauty, wholesale retail is shifting from a core growth driver to an amplifier of growth across several other levers.
- Jacqueline Flam Stokes Managing Director of Beauty and Health, NielsenIQ
No doubt the downfall of legacy luxury retailers signals a meaningful shift in how consumers engage with luxe beauty. The reality is relevance has diminished greatly over time alongside diminishing in-store inventory and trips. At its core, luxury beauty thrives in two dimensions: experience, and service and replenishment.
For experience, beauty specialty has already largely overtaken prestige department stores with strategies that keep discovery and indulgence relevant and engaging. When it comes to replenishment, convenience reigns supreme and Amazon is certainly leading, even for luxury, with more premium brands on the platform each year.
With first-party, more elevated storefronts for top brands like Clé de Peau, Dr. Barbara Sturm and Maison Margiela fragrance paired with Amazon’s logistical prowess, shoppers can easily access prestige beauty that previously may have commanded a trip to a department store.
Luxury with immediacy is the ultimate power duo. While ultra-premium department stores may be irreplaceable in nostalgia, retailers that combine experience with frictionless access will win shifting dollars in luxury beauty.
- Sonia Summers Founder and CEO, Beauty Barrage
From my perspective, what we’re seeing with Saks, Neiman Marcus and Bergdorf Goodman isn’t a sudden implosion. It’s the culmination of longstanding structural challenges within luxury retail. Heavy debt, operational strain and an overreliance on scale and real estate collided with a consumer who now shops beauty very differently.
Historically, department stores played an important role for luxury beauty brands, offering visibility and prestige. But they were never built to consistently deliver deep education, experiential storytelling or meaningful brand engagement at scale. As beauty has become more ingredient literate, results-driven and community-oriented, many brands were already reassessing their dependence on these channels well before the current headlines.
What’s emerging to fill the gap isn’t a single replacement, but a more intentional mix of specialty retail, brand-owned DTC, curated digital platforms and experiential formats like pop-ups and in-store activations. These environments allow brands to control their narrative, invest in education and build emotional connection rather than relying solely on shelf presence.
That said, I don’t believe luxury department stores are inherently obsolete. There is a path forward, but it requires a fundamental shift. Survival depends on moving away from being inventory-driven and toward becoming experience-driven: fewer brands, deeper partnerships, properly trained brand educators and immersive environments that make discovery feel personal again.
Just as importantly, leveraging real-time, on-the-floor data such as insights from in-store educators, shopper interactions and conversion behaviors can inform faster pivots, smarter assortment decisions and more effective brand strategies. When retailers and brands can see what’s actually happening in-store, in real time, they can adapt with far greater precision.
Ultimately, this moment forces brands to shift from chasing prestige distribution to building resilient, education-led, experiential strategies. The brands that will thrive are the ones that treat retail not as shelf space, but as a living brand moment where education, storytelling and human connection drive long-term loyalty.
- Kevin Scerbo Luxury Beauty Consultant
Many people started to see where Saks and Neiman Marcus were headed long before the merger, which led to luxury brands rethinking their distribution strategy. Some brands like Tom Ford and Hermès opened more Nordstrom and Bloomingdale’s doors, while others like YSL and Armani saw potential at Macy’s and Dillard's. Prada Beauty didn’t launch at either Saks or Neiman Marcus, but rather at Sephora and then Nordstrom.
Even legacy brands like Chanel and Dior opted to expand their skincare and makeup offering in Ulta. Each of these examples show that neither Saks nor Neiman Marcus have the same ownership of the high-end market as they did in decades past.
That trend continues with luxury niche fragrance brands like Creed, Parfums de Marly and Maison Francis Kurkdjian having launched at Bluemercury to help offset the losses at Saks and Neiman Marcus. Even luxury fashion houses like YSL and Dolce & Gabbana have added their premium fragrance collections to Sephora, both in-store and online. Tom Ford was an early adopter of this strategy with the Private Blends collection years ago and has only become more visible today.
Bergdorf Goodman is a unique store and has served as a launch pad for many brands over the years. Charlotte Tilbury and Victoria Beckham Beauty have all used Bergdorf’s power of prestige to gain interest from other retailers to then scale and broaden distribution nationally. Rarely, if ever, does a brand only sell at Bergdorf long term.
Given the number of other stores in NYC, that will just shift to Bloomingdale’s, Nordstrom or even Macy’s Herald Square. Macy’s has upped their game in a major way around luxury beauty in their recent renovation by adding numerous high-end brands in skincare, makeup and fragrance.
Amazon continues to gain new brands of all segments and price points, and I believe that will continue, given the convenience and speed in which they can deliver. And, truthfully, many brands need the distribution from a top-line sales perspective.
For me though, the big question is, how does Amazon create a real luxury experience, from site aesthetics to trial to shipping? It needs to look and feel different; it needs to feel elevated. It can’t arrive to me the same way my laundry soap does. Knowing them, I’m sure they are working on it.
In terms of new possibilities that don’t necessarily exist today, I think Bloomingdale’s and Nordstrom have a real opportunity to do something different that leverages their national brand equity and focus in on beauty even further than they already do.
Personally, I love what Harrod’s has done with H Beauty in the U.K. Is that something Nordstrom or Bloomingdale's could try? They could offer elevated services, premium brands, unique experiences, things that Sephora and Ulta can’t necessarily do today.
Creating something new in the digital space will be difficult, especially as Amazon digs in deeper to luxury, but I would love to see a new player emerge online. Sites like Net-a-Porter and Farfetch dabbled in beauty, with little success, but a pure beauty e-tailer like what we saw with gloss.com many years ago could be an interesting avenue to re-explore. I doubt this would have received traction or even consideration years ago, but given the distribution instability, one never knows.
In short, I don’t believe the nameplates of Saks, Neiman Marcus or Bergdorf Goodman are irreplaceable. Consumers just want a place to explore, try and play with luxury beauty products in an environment that matches the story that the brand they are buying is telling them.
- Susannah Dellinger Founder and CEO, Bright Beauty Connect
Luxury beauty retail has been shifting towards this major inflection point that we are now witnessing for close to 20 years. I can vividly remember standing on the selling floor of Saks in Atlanta around Halloween week of 2008 right after the market crash and looking around a once jammed cosmetics floor and realizing we could play a game of volleyball with the employees and not hit anyone it was so empty.
So, while not a surprise, we have seen this inevitable demise playing out in real time and the only shocking part is that it took this long. I think back all those years ago to when Bluemercury switched their entire store footprint model and moved out of malls into neighborhoods, and wonder what would have happened if Neiman Marcus and Saks had focused on the same thing in areas of the country outside New York, Texas and California, where the flagships were standalones and highly sought after.
So, what replaces the feeling of walking into those stunning sales floors, with gorgeous curations and exclusive hard-to-find brands with impeccable service? What's the counterpoint to the disco party vibe of self-service retailers like Sephora and Ulta, which while absolutely fun and offer tons of brand discoveries is not anything close to what we are facing losing in beauty on the luxury side?
I'm personally looking at and cheering on the rise of the independent luxury retailer. Places like Scott Miller in upstate New York, Kuhl Linscomb in Dallas, Dash in Atlanta, Shop Ivey in the Hamptons, Joseph's in Memphis, Woo in Atlanta and Nashville, Gwynn's in Charleston and, of course, Violet Grey and Cos Bar.
These stores focus on curation and service at legendary levels. When you walk in, you're typically greeted by name, employee turnover is incredibly low, store employees remember your preferences and set things aside for you when it comes in, and a glass of wine magically appears as you take a seat for an impromptu facial massage.
The new luxury is localized, larger than a typical boutique, but typically still small enough to be on a main street and in an adorable part of town with convenient parking to boot.
- Neil Saunders Managing Director of Retail, GlobalData
While Saks, Neiman Marcus and Bergdorf Goodman are relatively small players in the overall retail market, they do have an outsized role in luxury beauty retail, especially as a channel for wholesalers and brands. They are also important retailers for beauty brands to showcase themselves, and for some smaller brands they can help build credibility. So, any disruption or downsizing of them will hit hard as it diminishes a channel of education and experience in beauty.
All that said, beauty is a more robust category than something like apparel as there are already lots of other places where brands can showcase themselves such as in spas, hotels, specialist beauty players and so forth. Consumers are also more willing to buy luxury beauty online, so direct models also work more effectively than they might do in clothing. But still, most brands would still prefer to see all these chains as successful players.
- Elena Kirioukhina Retail Consultant, OpenStyle Consulting
Saks Global has filed for Chapter 11, which will likely result in the following events. First, vendors will not get paid or will receive only pennies on the dollar. Second, the company will be able to close stores in markets where Neiman Marcus and Saks operate in proximity. This is actually beneficial for the group, as commercial leases are typically long-term and difficult to exit unless a company files for bankruptcy.
As a result, we will likely see consolidation in markets such as Florida (Boca Raton, Bal Harbour), Chicago, Los Angeles and others. Fewer stores will mean fewer locations for high-end beauty brands.
American department stores already carry a large number of world-renowned brands, in addition to selections in other categories that tend to skew more contemporary. However, for newer high-end brands, this creates a significant challenge. For brands like Orveda or Noble Panacea, reinforcement and in-store training are critical.
For example, Nordstrom has just introduced an open-format floor in its New York City store. In such an environment, a brand like Orveda is set up to fail. Selling a $500 serum requires time, education, and dedicated attention. You need a floor with this type of mentality.
So, while many brands are moving online or shifting to other retail partners, the issues surrounding Saks Global are not critical for everyone. But for high-end brands trying to penetrate the U.S. market, this situation is close to a tragedy.
If you have a question you'd like Beauty Independent to ask retail consultants, analysts and investors, send it to editor@beautyindependent.com.
