The eCommerce giant accuses the company of breaking an agreement on the sale of Saks products on its website, Bloomberg News reported Wednesday (Jan. 14), citing a court filing.
Amazon had made an equity investment in Saks Global — a company formed from the merger of Saks and Neiman Marcus — in 2024, but now says that investment is “presumptively worthless,” the filing said.
Saks on Wednesday had declared bankruptcy and announced it had secured $1.75 billion in funding. However, Amazon argues that this financing would leave the retailer with billions of dollars in new obligations and includes terms harmful to creditors.
Amazon’s $475 million investment in Saks Global, the filing added, was contingent on Saks’ agreement to sell its products on Amazon’s platform. In exchange, Saks agreed to a referral fee and said it would make at least $900 million in payments to Amazon over eight years.
“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 of dollars in unpaid invoices owed to its retail partners,” Amazon’s filing said.
Saks advisers testified Wednesday that the retailer was facing liquidation without immediate access to the funding, Bloomberg added. Without access to that funding, “we’ll be dead in the water,” Saks restructuring officer Mark Weinsten said.
Saks raised billions of dollars in 2024 for its turnaround effort, which included purchasing NMG, the parent company of Neiman Marcus and Bergdorf Goodman. The goal was to establish a “technology-powered luxury retail company” whose investors included Amazon.
But that deal deepened Saks’ debt as it faced complaints about missed payments from suppliers, many of whom stopped shipments to the retailer.
Writing about the Amazon/Saks deal in 2024, PYMNTS CEO Karen Webster said the arrangement appeared to be aimed at “boosting the fortunes of two luxury retail franchises that have seen better days.”
“The more interesting story will be whether Amazon needs Saks Global to conquer luxury retail,” Webster added.
“Or whether, after getting a look under the hood, they find the model so broken they decide to go it alone — taking with them the 21% of Amazon’s 185 million Prime Members who are women with annual incomes over $100,000, just waiting to shop ’til they drop.”
