It’s almost like vendors and Saks Global have called a truce — whether it’s temporary or permanent remains to be seen, depending on how business progresses.

For the most part speaking on the condition they remain anonymous, small and medium-sized vendors in the U.S. and abroad told WWD that after months or a year or more of not being paid, Saks Global has within the last few weeks started paying for orders shipped. Larger designer brands and fashion conglomerates have consistently been paid.

“I am a little surprised. Last week I got a payment, I wasn’t expecting it,” said one executive from a midsized sportswear company, who was interviewed last week. “Banks are coming in to see me, if they approve the shipments, that would be heaven for me. I feel good that [Saks Global] is paying us, but I also feel I am taking some risk, and trying to forget feeling like the ‘abused wife.’ With banks’ approval of shipments, it would be business as usual with Saks Global. But without getting factored, I would have to put a cap on the amount of my exposure. It’s about doing what you feel comfortable with.”

A representative at one designer company said his company started to receive payments in May for orders that had been shipped in January. None of this company’s bills from 2024 have been paid. But Saks officials have said that it will pay past due bills to its vendors — amounting to about $275 million in total — in monthly installments beginning in July, with outstanding balances projected to be paid in full by the second quarter of 2026.

Meeting Its Promise

For now Saks is delivering on its promise to pay vendors 90 days after receipt of goods. Vendors are being paid on a rolling basis, depending on when their merchandise was received, so some are still anxiously awaiting payments. Vendors remain angered by the 90-day schedule, and said it’s practically unheard of in the industry, except during the pandemic when payments were extended.

Along with the commitment to paying vendors, at the end of this month Saks must make its first $120 million interest payment on the $2.2 billion in bonds it sold to buy the Neiman Marcus Group for $2.7 billion last December.

But Saks Global chief executive officer Marc Metrick at the end of May said the company has secured financing commitments to build about $700 million in liquidity. “Along with synergy realization and business performance exceeding our plans, we are well positioned to continue delivering for all of our stakeholders, including our brand partners,” he said, providing assurances to vendors.

On Wednesday, a Saks spokesperson said in a statement to WWD, “We are successfully executing against our previously announced new payment terms. The vast majority of our brand partners have worked with us on our new payment terms, and in addressing any past due balances. Payments are made on a weekly basis and we are focused on building lasting and durable brand partner relationships, enabling their businesses to grow alongside ours.

“With the terms outlined in February, we are setting a new working capital model, more closely aligning payments to our brands to the revenue coming from our customers. This enables us to invest in supporting the growth of the brands through marketing and the personalization work we already have well underway. We estimate that the change in payment terms will drive an incremental net $200 million in working capital efficiency that will be used to support brand partner sales growth,” the spokesperson added.

The spokesperson also indicated that the strategy at Saks Global involves “resetting the business model, reinventing the luxury shopping experience, scaling personalization, unlocking alternative revenue streams, and realizing synergies….We have already made meaningful progress as evidenced by our improving inventory flows, the launch of exciting strategic partnerships like Saks on Amazon Luxury Stores, and the acceleration of our synergy targets.”

Even More Synergies

The spokesperson indicated that Saks Global is “on track to achieve $600 million in synergies over the next five years, reflecting an additional $100 million versus our original target. We expect to realize almost half of that, or over $285 million in run-rate synergies, by the end of fiscal 2025, which is nearly double our original target.”

While clearly relieved that Saks has begun to pay for their orders, vendors need more. They want greater clarity on the game plan for the future — how Saks and Neiman’s are integrating, how the two retailers could differentiate in the context of luxury, whether store closings are in the cards, specifically where Saks and Neiman’s operate in the same markets or malls. Saks and Neiman’s are in eight markets together.

Vendors also voiced concerns about the loss of Saks Global management through consolidating Saks and Neiman’s, and want to know when Saks Global will start to re-animate stores with events and activations. That’s something Neiman’s had been aggressive with through dozens of vendor collaborations that occurred pre-acquisition. Two sources cited Saks’ cancellation of the 2024 holiday laser-light/fireworks extravaganza at the Fifth Avenue flagship as a red flag. One source close to Saks said it cost at least $2 million to stage the holiday display, for the fireworks, light technology, and performers which in past years featured Elton John, Idina Menzel and the Radio City Rockettes.

Saks Global hasn’t been totally devoid of events for its best customers, having hosted at Bergdorf Goodman a cocktail reception to celebrate Valentino Garavani’s “Ses Folies” collection, several jewelry pop-ups with luxury brands at Bergdorf’s and Neiman Marcus stores, and bringing top clients to experience the Cannes Film Festival, among other activities.

“I am concerned that a lot of the leadership is gone,” said the midsized vendor who started seeing some bills paid. “They seem to keep laying off people, for sure with the back offices of Neiman Marcus. And there’s a whole new buying team,” one that’s buying for both Saks and Neiman’s. “I am less pessimistic than I was a month ago, but I wouldn’t say I am overly optimistic either.”

Aware of the concerns, Emily Essner, president and chief commercial officer of Saks Global, and Paolo Riva, chief brand partnerships and buying officer, reporting to Essner, will give a presentation on June 18 to an audience of vendors at the Pitti Immagine Uomo menswear trade show being held in Florence from June 17 to 20. Two other Saks Global officials, Joo Woo, the senior vice president, brand partnerships and buying for men’s, and Bruce Pask, senior director of men’s fashion, will also address the audience. Vendors expect to learn a lot, and receive more assurances. Riva did meet with certain vendors at JCK in Las Vegas, the biggest trade show for jewelry, which was held June 6 to 9.

“They’re lucky they have Paolo on their team,” said the source close to Saks. Before the acquisition, Riva was general manager of brand partnerships and merchandising at NMG.

Vendors find it ironic that Saks was able to buy Neiman Marcus while being delinquent on paying bills. “It dates back to November 2022. It was around this time that Saks just stopped paying all invoices and refused to answer any inquiries,” said one vendor.

Neiman’s vs. Saks

One European vendor told WWD, “The experience has been very different between both groups,” meaning Saks and Neiman’s. “Neiman Marcus has been absolutely fine to deal with. We had great visibility and dialogue with the buyers. They have been nimble, reactive and pleasant. Saks has been very difficult to deal with. I haven’t been able to get ahold of them. There has been a huge churn in who you have to be dealing with. Neiman’s for sure, has been easier to deal with.

“Because I am a small business, it is extremely difficult for us. We are having to wait, we are 90 days to get paid. That is a long time for a business like us. I don’t know what the future holds, but at this point I’d rather be a part of it than not part of it….We are reducing our range on their platforms. If they go under, I am still going to be in for a lot of money. I really want to be aligned with them but I can’t afford not to receive funds. They have sold my items and received the cash, so why can’t they pay me?” the vendor added.

The vendor does expect payment around the end of June for a recent past shipment. “The 90 days will come into effect for us at the end of this month, it will be interesting to see what happens….I want to be with them, but I’m on the fence at the moment. I’m not sure which way it is going to go. I decided to stick with Neiman Marcus after they went bankrupt.” (Neiman’s went bankrupt in May 2020 due to the pandemic and debt and emerged from bankruptcy in September 2020.)

“Big brands can stand alone on their own. They don’t need Saks or Neiman’s. For a small, private brand like us, it’s nice revenue when you are working with them. It’s also branding for us. Being associated with them is a good thing. Saks is overdue six months, Neiman’s is current.”

On how Saks and Neiman’s will operate and possibly further differentiate, “We haven’t had clarity on that,” the European source said. “The messaging could be clearer.”

“If I was a betting man, I’d bet on Baker,” said another vendor, referring to Richard Baker, executive chairman of Saks Global, who last month said the company will slash 500 to 600 brands that don’t work within the portfolio. According to Metrick, they’re also expected to be paid for past shipments.

“Richard is such a pitbull about what he wants. He has so many ideas. Some of them yes, some of them I would say no to,” said the vendor.

“Maybe that’s the biggest problem. What Baker really offers is the opportunity to keep these two businesses alive. If he didn’t do what he did, they would all end up in bankruptcy. His biggest downfall is how he has handled the media and his communications to vendors. Smaller vendors have been hurt. I’ve been hurt. Depending on who the vendor is, there is a lot of hurt and fear and anger out there, but if they can turn the situation around and do the right thing, it will all be forgotten. They’re angry people out there, I should be one of them, but I didn’t panic. I rode it out. I was one of the vendors who he wasn’t paying. I am paid up as of today.”

On an even more positive note, Jonny Saven, chief executive officer of L’Agence, the L.A.-based contemporary firm, said simply, “Our overall business is thriving and Saks Global is a strong partner in making that happen. We are able to keep a strong flow of product to the Saks, Neiman Marcus and Bergdorf Goodman banners and believe in the future of our relationship.”

The owner of one American designer company recently shipped to Saks, but it was only after the retailer paid for some overdue invoices. About three or four months ago, the company took the approach of waiting until Saks makes a payment and then shipping a comparable amount of goods to the specialty chain.  

Dealing with the heightened challenges of keeping a business going when a retailer delays payments is “absolutely horrific,” the owner said. “We’ve always gone through times when cashflow is tighter than ever. But this has put a giant strain on the company for a couple of years. Think about the domino effect. We’re placing fabric orders, cutting styles and starting the [manufacturing] process six months prior to shipping.”

In turn, the cash strain that Saks has put on their company has made the mills require that they pre-pay fabric orders 50 percent upfront. And the entire balance of the production run must be paid before it goes out the door, the founder said. The total cost incurred by the designer company, due to delayed payments from Saks Global, is in the seven-figures, the owner said.

There is also a “huge time suck that puts this mental strain on the entire business. When you can’t pay the smallest of bills, your employees start to [wonder] will they make payroll?” The founder is trying to mitigate the company’s exposure to Saks, citing industry speculation that Saks Global, depending on how business progresses, could one day enter Chapter 11. Having been in business for a few decades, the owner said, “This is the most difficult time we’ve ever faced.”

Another company founder said “how sad” it is to see what has happened to Saks Fifth Avenue in recent years. “It’s not going to be the same. It can’t be the same. You just have to deal with it.”

Like other brands, the executive has been shipping apparel to Saks at her own risk for years. “Factors have not been accepting Saks for a couple of years,” she said. “Forget it — zero — they won’t give anything. Everything is on our own credit.”

That being what it is, the brand has been paid for its past due invoices prior to February shipments, but is owed for goods shipped since February. “The contract was for 30 days and now it is 90 days. I am being careful about what I ship to them,” she said.

The founder has met privately with Metrick and other senior Saks executives about the retailer’s new strategy. “They apologized. It was very nice. Honestly, I wasn’t expecting anything from that meeting,” the executive said.

Unlike years past, selling to Neiman Marcus now is “exactly the same situation” as selling Saks Fifth Avenue. “It’s a nightmare,” the founder said. “But they have to get through this and I hope they will. It’s not a fun road, but what are you going to do? You have to deal with it.”

Designer Tadashi Shoji said that his decades-long relationships he has “proudly maintained” have been an integral part of the his company’s  journey. “We value the shared history and mutual success we have cultivated over the years.”

At this time, Shoji is “navigating a prolonged delay in payments from Saks and Neiman Marcus, which has understandably placed strain on our business operations,” said the designer. “Given the depth and history of our relationships, this situation is both disappointing and concerning. The strength of any partnership lies in mutual accountability, and we urge Saks and Neiman Marcus to take timely action — not just for our company, but for the many vendor partners, who have contributed to their success over the years. We thank our loyal customers and retail partners for their continued support during this challenging time.”