This Iconic Department Store Chain Is Facing Bankruptcy (And Late Payments Are A Clear Sign)

It may soon be closing time for high-end department store Saks Fifth Avenue. While Saks officials denied any pending Chapter 11 protection in a statement to The U.S. Sun in October 2025, stating that "Restructuring is not being contemplated," the chain has consistently failed to pay its own suppliers. This lack of liquidity (or ignorance of accounts payable) rings an unfashionable bell generally heard by stores facing bankruptcy in 2025.

Many Saks vendors are angry about payments that are up to 18 months, or more, overdue. Some vendors with overdue invoices have been put on a twelve-month payment plan, which is also unusual. Saks leadership acknowledged some of the delayed payments in a February 2025 memo from CEO Marc Metrick to suppliers. However, the memo implied that if suppliers did not continue to send product — even if they had not yet been paid — they could be dropped from the Saks Global roster. "In the absence of the normal flow of goods, we anticipate that we will have to make changes to our brand partner matrix," Metrick stated in the memo (via Retail Dive). 

Metrick aims to "reset" luxury shopping, and has even rolled out personalization in shopping experiences by using AI. However, leaning on AI rather than timely payment of vendors may backfire. Multiple vendors have already spoken to the press about delayed payments, which could taint the experience for any would-be suppliers, and create a generally unpleasant arena for top-tier luxury brands. Shoppers may even turn to more affordable status symbols, like Coach rather than a spree at Saks.

Saks Fifth Avenue has been a department store for 123 years, and has made a name for itself as a significant dealer in luxury goods. However, by not paying its own suppliers, Saks runs the risk of losing out on desirable luxury product in a time when most luxury spending is already down. With that said, the company's recent expensive acquisition of competitor Neiman Marcus may also contribute to an eventual bankruptcy filing.

HBC, the holding company of Saks, acquired the Neiman Marcus Group for $2.7 billion in late December 2024. This acquisition was meant to stabilize the long-struggling luxury retail position of brands like Saks, Neiman Marcus, and the Neiman Marcus-owned Bergdorf Goodman. By presenting a united front as one entity, the newly-formed Saks Global intended to gain more power over vendors, customers, and a massive real estate portfolio. However, top executives left Saks after the purchase of the chain's longtime rival. Meanwhile, Off Fifth, Saks' off-price chain, lost its chief merchant to QVC. 

Now, many months after the acquisition, liquidity still remains an issue for Saks Global. While Saks can still succeed in turning its luxury conglomerate around, it would have to defeat gargantuan factors to do so, and rather quickly. Much like with Kohl's, a non-luxury department store also flirting with bankruptcy, tariffs and constricted customer spending have hit the retail sector hard. President Trump's new tariffs will not only impact consumer budgets, but also the greater luxury goods market.

In September 2025, Saks offered to sell a 49% minority sake in Bergdorf Goodman for $1 billion. Apparently, owning all of the competition did not cut it when funds were needed to pay down debt. Also in September, S&P Global analysts found that the outlook for Saks was still grim, stating, "We believe the capital structure remains unsustainable, and a continued free operating cash flow (FOCF) deficit is likely to pressure liquidity over the next 12 months."

As for store closures, in June 2025, Saks Global leadership said it would not be closing more stores nationally. This came after April 2025 saw San Francisco's Union Square location close – after a year of being open by appointment only. Similarly, Saks filed paperwork to close a Tennessee fulfillment center in April 2025, along with 450 jobs. Meanwhile, a Dallas location is slated to only be open through the 2025 holidays. 

Saks leadership has touted that the company's research shows luxury clientele won't be scared off by the higher prices sparked by tariffs and trade tensions. However, Saks sales are in decline, while complaints about deliveries are up. Saks may have a fortune in real estate and financing to make whatever moves it finds necessary, but damaged relationships with vendors may eventually be beyond repair.