As Saks’ E-Commerce Arm Reportedly Looks to Launch IPO, Retail Shares Spike

The e-commerce arm of Saks Fifth Avenue has started preparations to file for an initial public offering, The Wall Street Journal reported on Sunday.

The luxury retailer’s e-commerce business is reportedly targeting a valuation of around $6 billion for an IPO in the first half of 2022. The company is in the process of speaking to possible underwriters to help determine an offering price, the Journal reported.

In the wake of the news, shares of rival companies such as Macy’s, Nordstrom and Kohl’s were up on Monday.

In March, Saks Fifth Avenue’s parent company Hudson’s Bay Co. split the retailer’s website and stores into two separate businesses. The move followed a $500 million infusion from a venture capital firm Insight Partners into Saks’ e-commerce unit, which valued the business at $2 billion.

Saks, the new name for the e-commerce business, has continued to lead marketing and merchandising across both businesses and has retained ownership and control of Saks Fifth Avenue’s intellectual property. The store side of the business, Saks Fifth Avenue, works in tandem with Saks to oversee buy online, pick-up in store options, as well as exchanges, returns and alterations.

In March, HBC executive chairman and CEO Richard Baker said the transaction would allow HBC to “unlock significant value within our company’s assets.”

In a statement to FN, a Saks spokesperson said that company does not comment on rumors or speculation.

“At this time, we remain focused on executing our strategy and providing our customers with the best luxury shopping experience throughout our upcoming peak season and beyond,” the spokesperson said.

Across retail, digital businesses have soared in the pandemic. For example, Nordstrom’s digital sales in Q4 presented 54% of total sales, compared to 35% of total sales in the same period the year prior.

And while foot traffic and brick-and-mortar sales are picking up, in-store business is still recovering from a hit in 2020. Saks’ move to separate its e-commerce and store businesses represented a desire to lean into a successful part of the business that can drive shareholder value. In late January, a report from FN’s sister publication WWD suggested that the spinoff could precipitate a Saks.com IPO in the next 12 months.

One activist investor is currently pressuring Macy’s to undergo a similar split between online and store businesses to capitalize on an impressive digital growth in the last few quarters.

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