Marc Metrick sees bright skies ahead for Saks Global. 

Of course, he would. As chief executive officer of the still-new combination of Saks and Neiman Marcus with plans to “reset” luxury retailing, he has a big stake in that future. 

But since Saks bought Neiman’s in a $2.7 billion deal two days before Christmas, the narrative around the company has been less about reinvention than it has been about finances — from when it will pay vendors and how quickly it can cut costs to the rapid decline in its bond price and the race to shore up its liquidity. 

Now, with financial results for 2024 in the books and some new financing coming into place, Metrick is hoping to put some of the balance sheet minutia aside and be more of the visionary CEO. 

“Today is the turning point,” Metrick told WWD in an exclusive interview on Friday following a conference call with bondholders covering year-end results. “We cleared the air and we’ve cleared the path for growth. Saks is on very good footing, well underway on repairing and strengthening our brand partnerships, rebuilding trust with our brands. The balance sheet is now something that people should not worry about. There’s $700 million of liquidity.”

Just how much brands and bondholders and other investors will worry about the balance sheet now remains to be seen. The story at Saks has changed before, with dreams of a transformed luxury landscape chased by financial strain. 

But investors seemed to take heart. According to FINRA, Saks’ bonds were going for more than 47 cents on the dollar on Friday. That’s still low, but up significantly from under 39 cents earlier in the week.

And certainly some of the burden has been relieved. 

Saks has a $120 million bond interest payment due next month, another $120 million payment due in December and promises to make $275 million in back payments to vendors to stack up against that $700 million.

Half of the liquidity comes from $350 million in financing Saks secured late Thursday. The package included a $300 million FILO facility that was carved out of Saks’ asset backed lending facility as well as a $50 million secured term loan, both from SLR Credit Solutions. 

“Saks is in it and we’re going to do something great,” Metrick said. “The most important thing to me is reestablishing the credibility that we have with our partners and [realizing] synergies well ahead of plan.”

The company plans to cut $600 million out of its annual cost base over the next five years by trimming down as Neiman’s is integrated into Saks. That’s $100 million more than initially envisioned. By the end of the year, Saks plans to have cut costs by a run-rate of $285 million. 

Metrick is out on the highwire, looking to perform one more trick. 

Already Saks pulled off what many thought was impossible, fulfilling a long-held dream of executive chairman Richard Baker’s, the force behind the company. Without enough cash to pay vendors and with sales in decline, Saks managed to raise enough debt to buy the much stronger Neiman’s.

The company now has total borrowings of $4.3 billion, including $1 billion drawn from an asset-backed lending facility, $2.2 billion in bonds due in 2029 and a $1.3 billion non-recourse mortgage on the Saks Fifth Avenue Manhattan flagship.

Now, it’s cutting costs and updating its business model so it an afford that debt and fulfill the dream of a new luxury retail landscape. 

Fortune is said to favor the bold and Metrick and Baker are certainly that.

But to work, their plans will have to be backed up by a growing business. 

Some of Saks’ allies are already feeling better.

Gary Wassner, CEO of Hilldun Corp., has continued to support Saks as one of the few factors willing to finance shipments of goods to the company.

“I am approving orders with much more sureness,” Wassner said. “With the cost-cutting measures they’re putting into effect, and the synergies between the now-merged entities that are already impacting them positively, they now have more of a runway to achieve the full savings and efficiencies that they initially predicted would greatly improve their cash flow and profitability.

“We should all want Saks Global to succeed,” he said. “No one benefits if it fails. It dominates the U.S. luxury and designer market. The merged companies got off to a rough start, for sure. And everyone felt the stress, and many suffered from the situation. Now it’s up to management to take advantage of their positioning, rebuild confidence in the market, and start making money.”

For the year ended Feb. 1, Saks said revenues totaled $3.8 billion. That included about $432 million in sales from Neiman Marcus Group, which was acquired on Dec. 23. 

The “credit group” —  the company’s main business, including Saks Fifth Avenue, Neiman Marcus, Bergdorf Goodman and the Saks Off 5th brick-and-mortar stores, which are all financed collectively — produced sales of $3.5 billion for the year. 

Incorporating Neiman’s business for the whole year, sales fell 10 percent to $7.3 billion. Gross profit margins for the main business stood at 41 percent on a combined basis in 2024, an improvement of 80 basis points that was driven by lower markdowns and more concession sales.

While cutting price markdowns is a continual goal for retailers, Saks got there in the wrong way. 

The company’s slow — or non-existent — payments cut off the flow of goods to its stores and website, which according to one source, did not receive $650 million worth of inventory that it otherwise would have last year.

Going forward, Saks does not intend to keep leaning into concessions, but plans keep migrating toward a new approach. 

“We’re looking to reinvent the model,” Metrick said. “It’s not concession. It’s not wholesale. What’s the new model look like? The brands are excited to do that. Obviously for us, we have to figure out what’s the best model for us to have all the data control, the customer experience, all that.”

Saks made one key change right away and extended payment terms to vendors to 90 days from 30 days. 

While that change, coming after years of slow payment from Saks, caused an uproar when it was rolled out in February, it also helped the company play catch-up with its suppliers. 

The longer terms essentially gave Saks a $600 million boost — $400 million of which went to pay off past-due bills while the other $200 million was included with working capital, a source said. 

Now the company is said to owe $275 million to vendors from past shipments and plans to start paying that down over a year of monthly installments, starting in July. (There have been reports that Saks owed $1.3 billion in back bills last summer, but a source said that was the company’s total payables at the time). 

Saks said that its inventory flow was now “steadily improving” and that that led to a pick-up in sales later in the first quarter. The trend is expected to “normalize through summer and into its fall inventory build.”

Selling, general and administrative expenses came in at 42 percent of revenues last year, an increase of about 30 basis points, primarily due to the legacy Saks operations. 

All that boiled down to adjusted losses before interest, taxes and depreciation of $102 million, which included $42 million in earnings from Neiman’s during the last six weeks of the year. 

On a combined basis, adjusted EBITDA totaled $161 million for the year, with Neiman’s profits covering up for Saks’ business’ deficit.

Saks snagged Neiman’s. Now, Metrick has to make the whole thing work.