Saks.com Raises More Capital
Saks, the luxury e-commerce company, has raised more money to sustain its growth.
On Wednesday, Saks revealed that it had bolstered its existing asset-based revolving credit facility arranged by Bank of America NA from $350 million to $450 million.
More from WWD
Saks also said it closed on a $60 million “upsize” facility with Pathlight Capital LP, thereby building on an existing senior secured term loan facility. The closing, which happened on Aug. 11, resulted in a $175 million total credit facility, in which Pathlight served as administrative agent.
There were no changes to the maturity dates of either facility, which are both due in 2026. No payments are due until that time, which is consistent with when the original financing was secured in May 2021.
Saks’ debt position consists only of the term loan and any seasonal borrowings on the ABL.
“The additional capital provided under these facilities significantly enhances our financial flexibility and ability to support future growth initiatives,” Vince Phelan, chief financial officer of Saks, said in a statement Wednesday. “We believe that securing this additional financing reflects confidence in our strong foundation and positive momentum as we position Saks to lead in luxury e-commerce. We are pleased to further strengthen our relationships with Bank of America, Pathlight and the entire syndicate, and thank them for supporting our business.”
The upsized asset-based revolving credit facility will continue to help fund the company’s working capital needs and will be used for general corporate purposes, the company indicated.
“Saks’ strong foundation combined with its continued positive momentum reinforces our belief in the company’s potential to lead in luxury e-commerce,” Matt Williams, managing director of Pathlight Capital, said in a statement.
In March 2021, Saks Fifth Avenue was reengineered by its parent, the New York-based HBC, with a new business model, equity partner and stronger balance sheet, splitting the Saks Fifth Avenue store fleet and Saks.com into separate companies. Insight Partners, a venture capital and private equity firm, made a $500 million minority equity investment in the Saks e-commerce business, valuing it at $2 billion.
In May 2021, Saks.com secured the $115 million senior secured term loan arranged by Pathlight, as part of a round of financial transactions meant to strengthen its liquidity and potential to grow. At the same time, Saks.com closed on the syndicated $350 million, asset-based five-year revolving credit facility arranged by Bank of America.
The increased funding will help Saks.com compete in what’s become a vibrant, resilient sector with an escalating battle to win over fashion customers, between Mytheresa, neimanmarcus.com, Moda Operandi, Net-a-porter, Farfetch and Matchesfashion. E-commerce gained enormously through the pandemic, but lately its rate of growth has slowed as shoppers, eager to get out of their homes, have returned to visiting malls and stores.
Saks.com has been using its money to beef up its technology, marketing, contact centers, customer acquisition efforts and to enhance its shopping experience with personalization, styling services and shipping and return options. The company has also worked to upgrade the overall look and feel of the website.
There has been speculation that ultimately, transforming the Saks Fifth Avenue stores and e-commerce businesses into separate companies is a step to potentially spin off the e-commerce operation into a public company, depending on market conditions.
Saks.com is generating about $2 billion in annual sales, sources said, though that’s unconfirmed by the company.
“This is just early days for online shopping, especially in luxury,” Richard Baker, governor, executive chairman and chief executive officer of Hudson’s Bay Co., said in an interview at the time of the reengineering of Saks. “There is an opportunity for luxury to triple its size online. No one really knows how retailing is going to play out.”
Sign up for WWD's Newsletter. For the latest news, follow us on Twitter, Facebook, and Instagram.
