HBC sells stake in Saks online business for US$500M, makes it a separate company | iNFOnews | Thompson-Okanagan's News Source

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HBC sells stake in Saks online business for US$500M, makes it a separate company

In this Tuesday, Nov. 26, 2019, photo shows jewelry on display in The Vault at the Saks Fifth Avenue Flagship in New York. HBC has signed a deal to sell a minority stake in Saks Fifth Avenue's ecommerce business which it plans to spin off into a separate company. THE CANADIAN PRESS/AP/Mary Altaffer
March 05, 2021 - 7:14 AM

TORONTO - HBC has signed a deal to sell a minority stake in Saks Fifth Avenue's e-commerce business and turn it into a separate company, a move that will "redefine the luxury shopping ecosystem," the company said Friday.

American private equity firm Insight Partners has agreed to invest US$500 million in the deal, which values the standalone business that will be known as Saks at US$2 billion, the retailer said.

Saks Fifth Avenue's 40 stores will operate separately as an entity referred to as SFA, which will remain wholly owned by HBC.

The deal highlights the ability of HBC to "unlock significant value" in its assets, which include retail, technology and real estate holdings, the company's governor, executive chairman and CEO Richard Baker said in a statement.

“Luxury e-commerce 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," he said.

"The team’s fashion expertise combined with a renewed digital focus will provide customers with an unmatched shopping experience."

The sale of a minority stake in the luxury retailer's e-commerce business comes amid a sharp rise in online retail sales during the pandemic.

Moreover, retail observers have noted that while stores with mid-range prices have struggled during the COVID-19 pandemic, both discount and luxury retailers have emerged relatively unscathed.

"Luxury e-commerce is an exceptionally resilient high-growth sector," Insight Partners’ managing director Deven Parekh said in a statement.

"We are excited to invest in an iconic century-old brand that has so successfully morphed to a native digital strategy."

HBC said Saks and SFA will be better able to plan and invest in their respective models as separate but related companies.

Saks Fifth Avenue will remain as the customer-facing name for both businesses and the customer experience moving from the brick-and-mortar stores to online will be seamless, HBC said.

Saks will lead marketing and merchandising across both businesses, while the stores will fulfil the physical functions of Saks, such as online and in-store purchases, exchanges, returns and alterations, the company said.

Saks will feature a hybrid retail and marketplace platform, expanding its assortment while maintaining a curated experience, HBC said.

Marc Metrick, previously president and CEO of Saks Fifth Avenue, will serve as CEO of Saks and a member of the company’s board of directors. Larry Bruce will be president of SFA.

This report by The Canadian Press was first published March 5, 2021.

News from © The Canadian Press, 2021
The Canadian Press

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