Saks.com has secured a significant capital infusion from a syndicate of lenders to improve the luxury website’s liquidity, WWD has learned.
The syndicate is led by Pathlight and Bank of America.
“As expected, Saks has closed a transaction with Pathlight Capital and Bank of America, securing up to $60 million in incremental liquidity while maintaining our low debt levels,” a Saks.com spokesperson told WWD on Monday. “The additional capital enhances our financial position as we continue to navigate the challenging macro-environment. As longtime financing partners to Saks, we are grateful for Pathlight and Bank of America’s continued confidence in our business.” The investment will help Saks.com buy and sell goods, and meet past obligations to vendors.
Specifically, Saks has expanded its term loan facility with Pathlight, bringing the total borrowings under the facility to $215 million, reflecting what the company described as “low debt levels relative to the size of our business.” And then Saks also has the potential to access an additional $20 million in the future, once certain conditions are met.
In May 2021, Saks.com closed on a syndicated $350 million, asset-based five-year revolving credit facility arranged by Bank of America, and a $115 million senior secured term loan arranged by Pathlight. About two months before, Saks Fifth Avenue was reengineered by its parent, the Toronto-based Hudson’s Bay Co., with a new business model, equity partner and stronger balance sheet, splitting the Saks Fifth Avenue store fleet and Saks.com into separate companies. Insight Partners, a venture capital and private equity firm, made a $500 million minority equity investment in the Saks e-commerce business, valuing it at $2 billion at the time.
This year, there have been reports of unpaid bills fueling industry concerns about the state of the Saks luxury website as well as the Saks Fifth Avenue stores. The management of Saks.com oversees the merchandising and marketing of Saks.com as well as the Saks Fifth Avenue stores through various agreements. Saks.com and its majority owner HBC, which also owns the Saks Fifth Avenue brick-and-mortar retail business, have been maneuvering to increase liquidity.
Last February, addressing the state of affairs at Saks.com and the delayed vendor payments, chief executive officer Marc Metrick told WWD, “This is just us managing our business very aggressively. We don’t love it. But we want to be very communicative with people. We are actually very close to finalizing a capital raise for Saks.com this quarter. That should give people more comfort if they need it.”
Marc Metrick
Courtesy Photo
Pathlight Capital is a private credit investment manager dedicated to meeting the needs of companies that operate across a broad range of industries by providing asset-based loans. Bank of America Corporation is a major multinational investment bank and financial services with headquarters in Charlotte, N.C., and Manhattan.
The syndicate of investors also includes Story3 Capital Partners, an active dealmaker in the consumer sector and also works as industry advisers to CEOs, boards, founders and investors. The firm has investments in Recover, a textile recycling company; Renew, a dental implant company; Coco Republic, a furniture, home decor and interior design firm; Figs, a direct-to-consumer health care apparel and lifestyle brand, and Harry’s, a men’s shaving, hair and body care company.
In a statement from Story3 on Monday, the firm indicated, “This investment provides liquidity for Saks’ next wave of growth including support for its distinguished product curation-driven partnerships with the world’s leading luxury brands. As one of the most recognized brands in the luxury marketplace inclusive of a 100-plus-year heritage, Saks is well-positioned to take market share from disrupted industry players and monetize its large trove of proprietary data and its revered brand name on a global basis.”
Peter Comisar, founder and managing partner of Story3 and a former Goldman Sachs partner, said: “We believe we are at the early innings of powerful global growth and penetration for luxury brands. As new international regions become enchanted with the culture of fashion, no one is better positioned to be the beacon of taste and omnichannel excellence than Saks.”
Samir Shah, Story3 partner, added: “With decades of experience around the consumer landscape, Story3 believes in the convergence of consumer brands, digital media, and technology to succeed in today’s disrupted world and supports its investments to excel in each of those facets to create enduring value. Saks has exponential growth potential empowered by the tipping point of AI, personalization and resultant cohort monetization. As such, Saks is well-positioned to be the leading global voice and influencer in luxury.”
