Amazon’s $475 million investment in Saks Global has been deemed “presumptively worthless” following the retailer’s Chapter 11 bankruptcy filing, raising concerns over the future of their commercial partnership.
E-commerce giant Amazon announced on Thursday that its nearly $475 million equity stake in Saks Global Enterprises has become “presumptively worthless” after the luxury retailer filed for Chapter 11 bankruptcy. This development marks a significant downturn for one of Amazon’s most notable investments in the retail sector.
In court documents, Amazon urged a federal bankruptcy judge to block Saks’ proposed financing plan, arguing that the collapse of the luxury department store operator jeopardizes its investment and undermines the commercial partnership that brought Saks brands onto Amazon’s platform.
“Saks continuously failed to meet its budgets, burned through hundreds of millions of dollars in less than a year, and ran up additional hundreds of millions in unpaid invoices owed to its retail partners,” Amazon’s attorneys stated in filings submitted to the U.S. Bankruptcy Court in Houston. They contended that the proposed financing plan would burden the retailer with new debt and endanger unsecured creditors, including Amazon itself.
Amazon’s investment, made in late 2024, was linked to a commercial agreement that featured a dedicated “Saks at Amazon” storefront and a guarantee of at least $900 million in payments to the e-commerce giant over eight years. At the time, the deal was perceived as a strategic maneuver by Amazon to strengthen its presence in the luxury market.
However, Saks, which is the parent company of Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman, struggled to stabilize its finances. This instability led to an inability to maintain inventories and pay suppliers, as detailed in court documents and by restructuring officers. With approximately $3.4 billion in secured debt, the company stated it had no option but to seek Chapter 11 protection to restructure its obligations.
Late Wednesday, U.S. Bankruptcy Judge Alfredo Perez approved an initial $400 million tranche of Saks’ proposed $1.75 billion debtor-in-possession financing. This funding is intended to keep stores operational, suppliers paid, and employees on the payroll during the restructuring process, despite Amazon’s objections.
Saks’ chief restructuring officer, Mark Weinstein, informed the court that the initial funding is crucial for the company’s survival and confirmed that all stores remain open. He emphasized that the company’s challenges stemmed from cash shortages that hindered inventory replenishment, rather than a lack of customer demand.
Amazon’s legal team argued that Saks’ financing plan inappropriately uses the value of its flagship Manhattan store as collateral, despite previous commitments made to Amazon under their partnership agreement. They also indicated that they might pursue more aggressive court action, including the appointment of a trustee or examiner, if their concerns are not adequately addressed.
The bankruptcy of Saks represents a significant setback for traditional luxury retail and underscores the risks associated with complex strategic investments in an evolving market characterized by shifting consumer buying habits and increasing operational costs.
According to The American Bazaar, the outcome of this case could have far-reaching implications for both Amazon and the luxury retail sector as a whole.