Amazon dresses up its drab fashion with Saks stake
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
By Jennifer Saba
NEW YORK, July 10 (Reuters Breakingviews) -Amazon.com AMZN.O boss Andy Jassy is sharply pairing a tailored blazer with cheap cargo pants. The e-commerce goliath agreed to back Saks Fifth Avenue’s deal to buy rival swanky department store operator Neiman Marcus at the same time it’s considering a competitor to bargain clothing vendors Shein and Temu. A high-low approach should dress things up.
The $2 trillion company has had a hard time finding the right fit. Amazon accounts for 35% of U.S. apparel e-commerce sales this year, or about $60 billion of gross market value, research outfit eMarketer estimates. It claims about 60% of the office equipment and supplies market and half in computers and electronics.
There’s plenty of upside for Amazon. Luxury attire is far more profitable while fast fashion’s popularity looks sustainable. The Shein and Temu apps were both among the 10 most downloaded in May, according to Sensor Tower.
HBC, the parent company of Saks, said over the July 4 U.S. holiday that it would pay $2.7 billion for Neiman’s namesake chain and its luxe Bergdorf Goodman shops, a long-mooted deal as high-end merchants struggle to cater to online shoppers. Neiman Marcus also emerged from bankruptcy in 2020 only to encounter pressure from suppliers LVMH LVMH.PA and Richemont CFR.S. Joining forces with Saks in theory provides extra heft to negotiate on behalf of 150 locations with a combined $10 billion in annual sales.
Amazon’s investment is more promising than other recent initiatives. Four years ago, it opened Luxury Stores with Oscar de la Renta and sells pricey secondhand purses in partnership with What Goes Around Comes Around. The efforts haven’t taken off, evidenced by the deeper selection of designers available on the Saks and Neiman Marcus sites.
Moreover, Amazon’s business model clashes with reality because it seeks to keep a grip on pricing, customer data and brands. Makers of upscale goods have their own ideas and want to steer well clear of inexpensive alternatives. Having a stake in the newly created Saks Global arm, assuming trustbusters don’t intervene, should give Amazon a clearer window into how richer consumers shop, important insight considering that just 2% of customers account for half of all luxury industry revenue, according to analysts at TD Securities.
The lower end of the market is a bigger threat. Partly by exploiting U.S. tax loopholes, Shein and Temu are posing fresh challenges to Amazon, helping explain why it may start its own channel of Chinese vendors shipping directly to customers, per CNBC. As any fashionista knows, chic and affordable is often a winning combo.
Follow @jennifersaba on X
CONTEXT NEWS
HBC, the parent company of Saks Fifth Avenue, said on July 4 it had agreed to buy rival Neiman Marcus for $2.7 billion with plans to combine the upscale department store chains into a new group separate from its Hudson’s Bay business.
Saks Global also will include Saks Off 5th and Bergdorf Goodan, each of which will operate under their respective brands.
As part of the deal, Amazon.com and Salesforce will become investors in Saks Global. HBC said it had secured a $1.2 billion term loan from Apollo Global Management and a $2 billion revolving loan facility from Bank of America, Citigroup, Morgan Stanley, RBC Capital Markets and Wells Fargo.
M. Klein & Co and Solomon Partners are advising HBC. JPMorgan and Lazard are advising Neiman Marcus.
Graphic: Amazon's share of US e-commerce sales https://reut.rs/3XW9FfN
Editing by Jeffrey Goldfarb and Sharon Lam
Activos relacionados
Últimas noticias
Descargo de responsabilidades: Cada una de las entidades de XM Group proporciona un servicio de solo ejecución y acceso a nuestra plataforma de trading online, permitiendo a una persona ver o usar el contenido disponible en o a través del sitio web, sin intención de cambiarlo ni ampliarlo. Dicho acceso y uso están sujetos en todo momento a: (i) Términos y Condiciones; (ii) Advertencias de riesgo; y (iii) Descargo completo de responsabilidades. Por lo tanto, dicho contenido se proporciona exclusivamente como información general. En particular, por favor tenga en cuenta que, los contenidos de nuestra plataforma de trading online no son ni solicitud ni una oferta para entrar a realizar transacciones en los mercados financieros. Operar en cualquier mercado financiero implica un nivel de riesgo significativo para su capital.
Todo el material publicado en nuestra plataforma de trading online tiene únicamente fines educativos/informativos y no contiene –y no debe considerarse que contenga– asesoramiento ni recomendaciones financieras, tributarias o de inversión, ni un registro de nuestros precios de trading, ni una oferta ni solicitud de transacción con instrumentos financieros ni promociones financieras no solicitadas.
Cualquier contenido de terceros, así como el contenido preparado por XM, como por ejemplo opiniones, noticias, investigaciones, análisis, precios, otras informaciones o enlaces a sitios de terceros que figuran en este sitio web se proporcionan “tal cual”, como comentarios generales del mercado y no constituyen un asesoramiento en materia de inversión. En la medida en que cualquier contenido se interprete como investigación de inversión, usted debe tener en cuenta y aceptar que dicho contenido no fue concebido ni elaborado de acuerdo con los requisitos legales diseñados para promover la independencia en materia de investigación de inversiones y, por tanto, se considera como una comunicación comercial en virtud de las leyes y regulaciones pertinentes. Por favor, asegúrese de haber leído y comprendido nuestro Aviso sobre investigación de inversión no independiente y advertencia de riesgo en relación con la información anterior, al que se puede acceder aquí.