Last week, a merger between Neiman Marcus and Saks Fifth Avenue came closer to becoming a reality, but a newly emboldened FTC may try to block the deal. Don’t forget to subscribe to the Glossy Podcast for interviews with fashion industry leaders and Week in Review episodes. Plus, check out the Glossy Beauty Podcast for interviews from the beauty industry. —Danny Parisi, sr. fashion reporter
Saks Fifth Avenue’s long road to merging with Neiman Marcus
As the consolidation of the fashion industry continues, mergers and acquisitions may face a tougher challenge against a newly reinvigorated Federal Trade Commission.
As first reported by WWD on Tuesday, the long-rumored deal to merge Saks Fifth Avenue and Neiman Marcus is looking more likely by the day. As soon as next month, a $3 billion deal to merge both companies could be announced.
The details of the deal are complex, including the addition of other parties like German retailer Zalando, which will provide funds for the deal. As recently as this year, Saks Fifth Avenue was reportedly having difficulty paying its vendors for their goods, which makes a $3 billion acquisition deal seem odd. However, it recently raised $340 million to help stay afloat.
The biggest question about the deal is whether the FTC will allow it to go unchallenged. Under the new leadership of Lina Khan who was appointed in 2021, the FTC has been stricter around megamergers and other corporate activity, banning noncompete clauses and suing other major commerce corporations like Amazon over anticompetitive practices. The FTC worked to block Amazon’s acquisition of Roomba-maker iRobot earlier this year. The FTC further accused Amazon of using the messaging app Signal to destroy evidence related to the agency’s suit.
The FTC’s recent lawsuits have been enough to provoke a response from lawmakers. Republican Representative James Comer announced an intention to probe the FTC’s work with European regulators to block Amazon’s iRobot acquisition.
Despite the challenges facing the luxury sector, Saks Fifth Avenue and Neiman Marcus are two of the biggest names in American luxury brick-and-mortar. That could trigger the FTC’s scrutiny of the deal. That looks especially likely given the FTC’s lawsuit to block another major fashion merger this year, the Tapestry-Capri deal. Tapestry has already seen a decline in net income to $139 million last quarter from $186 million in the same quarter last year.
