Saks Fifth Avenue is far behind on payment to many of its vendors despite the $2 billion merger deal it just signed with Neiman Marcus, according to several brands who work with the retailer.
Ryan Babenzien, the entrepreneur behind the men’s sneaker brand Greats and the beauty and wellness company Jolie, said he’s owed over $15,000 from Saks Fifth Avenue from an order the retailer placed last year. The product was delivered and sold to customers, but Jolie has yet to see a dime of it, Babenzien said. Luckily, Jolie is profitable and not hurting for the loss of $15,000, he noted.
“It’s crazy to me,” Babenzien said. “They just stopped paying even though we had 100% sell-through. They even tried to place another order when they hadn’t paid us for the first one so we never sent them any more inventory.”
Babenzien believes it’s a systemic issue for Saks Fifth Avenue. Dozens of other brands are also owed money, including skin-care brands Luna Bronze, Beauty Concept Brands, Symbiome and Solawave, and also CTE Watch Co. Many are owed far more than the $15,000 that Jolie is waiting on. CTE Watch Co., which distributes fine jewelry and watches to wholesalers, is owed hundreds of thousands of dollars, president of sales Emiliano Shnitzer-Bartocci said on LinkedIn.
“It was amusing to continue to receive [product orders] from them while they also ignored every invoice we sent and refused to pay us,” said Andrew Silberstein, founder of Solawave.
Babenzien said it’s an open secret that many retailers rarely pay on time. The wholesale relationship is often structured where there are numerous opportunities for the brand to be charged or penalized for failing to hold up their end of the bargain — with late delivery or incorrect packaging, for example — yet retailers routinely stiff brands and delay payment.
“They’d never pay for product without receiving it [first],” Babenzien said. “But if the situation were reversed, they would no doubt get legally aggressive with us. I don’t want Saks to fail, but when retailers behave like this, it erodes the trust between them and brands.”
Both Babenzien and Silberstein said they have sent the debt to a collections agency. Babenzien said, based on his conversations with other brand owners, he estimates Saks owes millions of dollars to over a hundred brands.
Saks’s refusal to pay its vendors comes just as it is entering a high-profile merger process with Neiman Marcus, creating a luxury retail conglomerate called Saks Global with Saks Fifth Avenue, Neiman Marcus, Saks Off 5th and Bergdorf Goodman under one roof.
The news of the merger and its eye-popping price tag made the unpaid debts sting that much more, according to several of the brands who are owed money. Saks parent company HBC reportedly paid over $2 billion for the acquisition of Neiman Marcus.
“What I don’t understand is how you can get someone to give you a couple of billion dollars to buy Neiman Marcus when you can’t even cough up $15,000 to pay your vendors,” Babenzien said.
When contacted to comment on this story, a Saks spokesperson said, “Saks is committed to fulfilling its obligations to its vendor partners. Any delayed payments are due to navigating our business through the current challenging macroeconomic environment. No funds that otherwise support operations or vendor payables were used for the financing or associated costs of the proposed Neiman Marcus Group transaction.”
