HBC will spin off Saks Fifth Avenue’s ecommerce business as a standalone entity that will be called Saks. Growth capital investor Insight Partners will make a $500 million minority equity investment in Saks in a deal that values the online retailer at $2 billion.
The 40-store Saks Fifth Avenue chain will continue operating as an entity called SFA that will remain wholly owned by HBC. The holding company expects to be able to better plan for and invest in the respective service models of each individual company after to the split.
President and CEO of Saks Fifth Avenue Marc Metrick will become CEO of Saks and a member of the company’s board of directors. Under his leadership, Saks will make strategic investments to evolve and expand its online experience, with the ultimate goal of creating a hybrid retail and marketplace platform to expand its assortment while maintaining a curated experience.
“Luxury ecommerce is poised for exponential growth, and as a standalone digital company with an existing strong position in luxury, Saks is primed to win significant market share,” said Richard Baker, Governor, Executive Chairman and CEO at HBC in a statement. “With this move, we are redefining the luxury shopping ecosystem, supercharged by an enviable customer base, incomparable brand equity, long-standing relationships with top designers and exquisite stores in top markets across North America.”
Saks and SFA will work in conjunction to deliver a seamless omnichannel experience. Stores will fulfill the physical functions of Saks, such as buy online, pick up in-store (BOPIS), exchanges, returns and alterations. Additionally, Saks will lead marketing and merchandising across both businesses.
Larry Bruce, Director of Stores for Saks Fifth Avenue, has been appointed President of SFA. He will report directly to Baker.
“Saks’ expanding online presence will drive brand awareness while the physical locations will continue to serve as an important customer touch point,” said Metrick in a statement. “I am certain that Larry is the right leader to continue driving the store fleet into the future. We look forward to maintaining a symbiotic relationship and working together to provide a seamless customer experience across all channels.”