New York City — HBC and leading growth capital investor Insight Partners have entered into a partnership that establishes Saks Fifth Avenue’s e-commerce business as a standalone entity, which will be known as Saks. Insight Partners has made a $500 million minority equity investment in Saks, valuing the business at $2 billion. The retailer’s 40-store fleet will operate separately as an entity referred to as SFA, which remains wholly owned by HBC. As separate but related sister companies, Saks and SFA will be better able to appropriately plan for and invest in their respective service models.
“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,” says Richard Baker, HBC’s governor, executive chairman and CEO. “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. The team’s fashion expertise combined with a renewed digital focus will provide customers with an unmatched shopping experience.”
Marc Metrick, previously president and CEO of Saks Fifth Avenue, will serve as CEO of Saks and a member of the company’s board of directors. Under his leadership, Saks will make strategic investments to evolve and expand its online experience. These investments will bolster Saks’ already well-established digital business, starting with strengthening its service model through elevated styling capabilities and data-driven personalization. Ultimately, Saks will feature a hybrid retail and marketplace platform, expanding its assortment while maintaining a curated experience.
“For nearly a century, our customers have loved and trusted the Saks Fifth Avenue shopping experience, cementing the brand as a leading fashion authority and setting the bar in luxury retail,” Metrick says. “As a standalone company, we are well-positioned to make the appropriate investments to drive exponential growth and deliver the same exceptional experience online. We are energized by the opportunities that lie ahead for our customers and our vendor partners. This is a pivotal beginning of Saks’ next 100 years as a leading luxury retailer.”
With Saks’ transition to an e-commerce business, Sebastian Gunningham will join the company’s board of directors and serve as an advisor. Gunningham was previously a member of the executive team at Amazon and led its marketplace expansion, among other large technology and operational divisions at the company. He has also held executive roles at Apple and Oracle.
Saks Fifth Avenue will remain as the customer-facing name for both businesses. Saks and SFA will work in conjunction to continue delivering a seamless customer experience.
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, exchanges, returns and alterations.
Larry Bruce has been appointed president of SFA and will report directly to Baker. Bruce has been with Saks Fifth Avenue for nearly 20 years and has served for the past 8 years as director of stores.
Rhône Capital, a significant shareholder of HBC, was actively involved in the transaction.
“There is great potential in businesses that operate at the intersection of retail, technology and real estate,” says Franz-Ferdinand Buerstedde, managing director, Rhône Capital. “We are pleased to see this transaction come to fruition and are confident it will lead to significant value creation. The strategy to expand Saks’ e-commerce offering while continuing to serve customers through its well-positioned store locations will be mutually beneficial, and further solidify the Saks Fifth Avenue brand as the true leader in luxury retail.”
Morgan Stanley & Co. LLC served as HBC’s placement agent for the transaction. Ropes & Gray LLP and Stikeman Elliott LLP served as legal advisors to HBC. District Capital Partners served as financial advisor and Willkie Farr & Gallagher LLP served as legal advisor to Insight Partners.
HBC is a holding company of portfolio businesses whose companies include: Saks Fifth Avenue, a premier luxury retailer; Hudson’s Bay, Canada’s preeminent multi-category retailer; and Saks OFF 5TH, a leading off-price retailer. HBC owns or controls, either entirely or with joint venture partners, approximately 40 million square feet of gross leasable area. HBC Properties and Investments, the company’s real estate and investments portfolio business, manages these assets along with additional real estate offerings, including Streetworks Development, its property development division. Founded in 1670, HBC is North America’s longest continually operating company and is headquartered in Toronto and New York. For more information, visit www.hbc.com.
Insight Partners is a leading global venture capital and private equity firm investing in high-growth technology and software ScaleUp companies that are driving transformative change in their industries. Founded in 1995, Insight Partners has invested in more than 400 companies worldwide and has raised through a series of funds more than $30 billion in capital commitments. For more information, visit www.insightpartners.com.
SOURCE: HBC/Insight Partners