Balking At Saks Global’s New Payment Terms, Beauty Brands Weigh Whether To Work With The Retailer

Saks Global, the newly formed parent company of Saks Fifth Avenue, Saks Off 5th, Neiman Marcus and Bergdorf Goodman, is trying to regain the trust of vendors by addressing its almost two-year delinquency on payments, but is simultaneously eroding it by introducing new payment terms disfavored by them.

Under the new terms, which were outlined in a Feb. 14 letter to 2,000 vendors that communicated Saks Global has “ample liquidity to execute its strategy,” purchase orders will be paid 90 days from receipt of inventory while past due invoices will be paid in 12 installments beginning in July. In the letter, Saks Global CEO Marc Metrick warns brands that cease shipping products to the company will be replaced in its assortment. Saks Global is the result of Hudson Bay Co.’s $2.7 billion acquisition of Neiman Marcus Group finalized last year.

“Our expectation is that this provides the clarity and certainty you have been seeking. To that end, we are looking forward to seeing the flow of merchandise return to normal levels so that we can begin to focus on driving our businesses together,” wrote Metrick. “In the absence of the normal flow of goods, we anticipate that we will have to make changes to our brand partner matrix. We are confident in our go-forward strategy and that the plan outlined…is the most prudent way to ensure continuity and consistency of payments.”

Beauty brands owed money by the company aren’t assuaged by its assurances they’ll be compensated and are wary of maintaining a relationship with it. Beauty industry insiders argue the 90-day payment terms hit emerging brands with little financial cushions particularly hard as they manage cash flow. “Brands are going nuts over that,” says a beauty brand consultant. “I mean, in what world can an emerging brand make those terms work?”

Emerging beauty brands report they usually encounter 60-day payment terms, and 30-day payment terms were previously the norm at Neiman Marcus. To protect their bottom lines, beauty brands of all sizes and stages are weighing whether to keep working with Saks Global. Many are attempting to negotiate better terms, and Metrick confirmed in an interview with the publication Business of Fashion that brands may have different terms, although he implied term variations aren’t due to personal connections or ownership by large conglomerates.

“Many people are just so over working with the bigger stores,” says Adam Hochschuler, founder of Moodcast Fragrance Co., a home fragrance brand that’s been owed money by Saks since September 2023. “They are like, well, we need 2% for this and 1% for that and this for that. They just have so much power. It’s so imbalanced.”

Despite their dismay, emerging beauty brands looking for luxury retail distribution generally can’t afford to cut Saks Global loose. With Saks Global’s annual sales volume for the group forecast to reach $7.4 billion in 2024, it holds tremendous leverage in a luxury retail and department store arena that’s been cooling over the past few years. Online, the landscape isn’t much sunnier as e-tailers like Farfetch and Net-a-Porter have retreated from the beauty category.

Neil Saunders, managing director of retail at data analytics firm GlobalData, predicts Saks Global will bleed market share if its alienation of brands persists. “In the short term, some will decide that Saks is still worth bothering with,” he says. “In the longer term, Saks will likely lose market share and other channels and retailers may offer favorable terms.”

Select emerging beauty brands are getting outside help to secure long overdue payments from Saks. Moodcast received half of a $25,000 outstanding payment last month after it hired Jayaram Law, a firm that’s represented several Saks vendors, on retainer to pursue the payment. The second half of the payment is set to be paid in the next few weeks. Moodcast negotiated 60-day payment terms with Saks in 2023.  

“Every email that’s sent costs me hundreds of dollars and it’s just so frustrating,” says Hochschuler. “In the end, we’re going to pay around $5,000 to get $25,000. It is ridiculous. Saks should have to cover that or at least pay me interest on the money for the year and a half that it was late, but they’re like, just be lucky you’re getting anything.” 

“There’s not enough money being made after all the costs involved to service them.”

Now, the problem seems to be spreading to Neiman Marcus. Hochschuler says it hasn’t paid Moodcast’s last four invoices, amounting to slightly over $5,000. The majority were due in January, and the brand was informed payments were delayed because of Saks Global’s integration of Neiman Marcus. Along with Saks and Neiman Marcus, Moodcast is available on Amazon and at Paper Source and about 500 boutiques.

“To not have had some measure in place to continue to pay vendors during the transition is ridiculous to me,” says Hochschuler. “So much business is moving online, though. The volume that was once there isn’t there anymore. At the end of the day, Neiman is a marketing play at best. There’s not enough money being made after all the costs involved to service them…It doesn’t seem worthwhile.”

Vella Bioscience is owed $3,500 by Saks, but nothing by Neiman Marcus. Sold on Saks’ website until the retailer exited sexual wellness last year, the sexual wellness brand had given up on recouping what it’s owed until Metrick’s letter showed up in its inbox last month. Vella Bioscience is also at Bluemercury and Cos Bar and on Amazon.

“I can appreciate a business’s ups and downs, but I’ve also been a far less victim of it than other brands have,” says Carolyn Wheeler, co-founder and CEO of Vella Bioscience. “I feel optimistic that that will come to fruition and hopefully that they’ll gain back a lot of their vendor trust. Sexual wellness has so many challenges that, given all the shadow bans on digital, any opportunity for discovery is something that’s valuable. We don’t have the luxury to be discriminate about the retailers that we work with.”

Saks combined with Neiman Marcus Group from a weak position. According to Bloomberg Second Measure consumer transaction data provided to the publication Retail Dive, sales drops at Saks accelerated in 2024 compared to the year prior, with sales in its off-price division declining more than twice as much as the full-line Saks Fifth Avenue business. Its parent company HBC secured a $2 billion junk bond to finance the deal with Neiman Marcus Group, and Amazon, Salesforce, Authentic Brands Group and Apollo joined it as minority shareholders.

Discussing the challenges facing multi-brand luxury retailers, Metrick told BoF, “The model doesn’t work. You can take cash in, but you’re paying people fast and building beautiful shops and the price of advertising has doubled…The amount of competition has increased, the verticalization of the brands themselves opening their own stores has increased.”

The financial ratings firm S&P Global forecasts that pro forma revenue for Saks Global declined about 9% last year versus 2023 as the company contended with soft discretionary spending and disrupted inventory flow from payment delinquencies. Its outlook for the year ahead is stronger, though, with pro forma revenue increasing 5% as cash flow and vendor relations improve. The firm expects revenue at Saks Global to increase 4.2% in 2026.

To boost profits, Saks Global aims to cut costs to the tune of $500 million over the next few years, starting with labor and real estate reductions. Last month, it slashed about 5% of its United States workforce in finance, legal and operations and announced it would be closing the iconic Neiman Marcus flagship location in Dallas. The Saks Fifth Avenue store on Worth Avenue in Palm Beach, Fla., is scheduled to close this year and the flagship store in Toronto is rumored to be shutting down, too, although the shuttering hasn’t been confirmed.