Saks Fifth Avenue’s parent company is splitting off the retailer’s website into a separate business from its stores following a $500 million infusion from a venture capital firm.
Today, Hudson’s Bay Co. announced that it had entered into a partnership with Insight Partners, which made a minority equity investment in Saks — the name of the new standalone e-commerce entity. The chain’s brick-and-mortar fleet of 40 stores will operate separately, be referred to as SFA and remain wholly owned by HBC.
According to the company, Saks will lead marketing and merchandising across both businesses, while the stores will fulfill the physical functions of Saks, such as buy online, pick-up in store, as well as exchanges, returns and alterations. Saks will retain ownership and control of Saks Fifth Avenue’s intellectual property. (Saks Fifth Avenue still plans to accept customer returns, exchanges and SaksFirst credit cards both online and in stores.)
“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,” governor, executive chairman and CEO Richard Baker said in a statement. “With this move, we are redefining the luxury shopping ecosystem, supercharged by an enviable customer base, incomparable brand equity, long-standing relationships with top designers and exquisite stores in top markets across North America.”
According to Baker, the transaction would allow HBC to “unlock significant value within our company’s assets.” As the COVID-19 pandemic keeps shoppers indoors and away from stores, Saks.com is supposedly seeing greater success than its physical locations. 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.
As part of the transition, Marc Metrick — previously the president and CEO of Saks Fifth Avenue — will serve as the chief executive of Saks as well as take a seat at its board. Former Amazon executive Sebastian Gunningham will also join the board of directors and serve as an advisor to Saks, while Larry Bruce has been appointed president of SFA, reporting directly to Baker.
“As a standalone company, we are well-positioned to make the appropriate investments to drive exponential growth and deliver the same exceptional experience online,” Metrick added. “This is a pivotal beginning of Saks’ next 100 years as a leading luxury retailer.”