When Financial Engineering Meets Retail Reality: The Saks Global Collapse [26]

On January 14, Saks Global filed for Chapter 11 bankruptcy protection. The parent company of Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman; three of the most iconic names in American luxury retail; collapsed under the weight of $2.7 billion in debt, roughly one year after the merger that created it.

Richard Baker, the man who architected this disaster, has been replaced by Geoffroy van Raemdonck, the former Neiman Marcus chief who now inherits the wreckage.

This isn't just another retail bankruptcy story. It's a case study in what happens when leaders operate far outside their core competency and treat relationship-dependent businesses with purely transactional thinking.  It looks like many of the private equity/finance-driven retail disasters over the past 20 years – Sears, Guitar Center, ToysRus, Payless, Belk, J. Crew, I could go on for a while.  All of them have one thing in common: companies run by spreadsheet jockeys who knew little or nothing about retail.

The Trail of Destruction

Fortune magazine described Richard Baker as having "the opposite of the Midas touch" when it comes to retail.

He bought Lord & Taylor in 2006 for $1.2 billion. He sold it in 2019 for $100 million. It was out of business by 2020. He acquired Hudson's Bay Company in Canada in 2008. He liquidated it in 2025, ending a 355-year run in business. He bought the flash-sales website Gilt Groupe, then dumped it at a loss. He launched Hudson's Bay stores in the Netherlands in 2017; they closed two years later.

Baker came from real estate, or I should say, his father came from real estate, having built a mall development empire. In 2005, Baker formed a private equity firm, there’s that term again, specifically to snap up retailers with valuable real estate. That strategy tells you everything you need to know about his approach: he saw department stores not as relationship businesses built on trust with customers and vendors, but as real estate portfolios waiting to be monetized.

The Fatal Flaw: Real Estate Thinking in a Relationship Business

Retail is not a real estate business. It's a relationship business, especially luxury retail. Relationships with vendors who supply the merchandise. Relationships with customers who expect an experience that justifies premium prices. Relationships with the communities where these stores become landmarks and destinations.

Baker never understood this. On a call with lenders in early January, he offered little in the way of solutions to get the retailer back on track. According to Bloomberg, at certain points he seemed to be asking the creditors for ideas! The man who had spent two decades acquiring retail brands couldn't articulate a vision for running one.

My colleague Rita McGrath put it perfectly: "It is so sad when deal-making CEOs forget the iron laws of Strategy 101. Focus on meeting your customer's needs. Make sure what you are doing is consistent with your brand. Have something rare and scarce that gives you pricing power. Care about the human organization you are running. It's a shame we have to see such needless value destruction."

The Vicious Cycle That Kills Luxury

To service the $2.7 billion in debt from the Neiman Marcus acquisition, Saks stopped paying vendors on time. Not a few days late; consistently 27 to 41 days late, far exceeding the industry standard of 10 to 12 days. Then they moved to 90-day payment terms. Then they stopped paying altogether.

Vendors responded exactly as you'd expect. They stopped shipping. Some reduced orders. Others cut off the relationship entirely. Shelves went empty. S&P analysts wrote that Saks Global had a "less-than-adequate in-stock inventory position."

When I first arrived at ToysRus, I joined about a year after KKR, Bain, and Vornado purchased the brand. We were paying vendors 30-60 days late.  This was killing our relationships with them, causing product shortages and getting in the way of long-term planning.  Our CFO, Clay Creasey, helped us push the board to get payments back on terms.  This had a significant positive impact on our ability to work with vendors and on the support they provided.  I’m sure I’ll write much more on the TRU story in the future, but at this point, we had plenty of cash to pay on time, which changed years later.    

Two Ways to Handle Vendor Relationships

I've seen both sides of this equation in my career, and the contrast couldn't be more stark.

When I took on the turnaround at Brookstone, the first thing we did was pick up the phone and call all of our landlords. We were direct with them: "We won't be making rent payments for October, November, and December. We need your support. We will pay you in full on December 26 after we hopefully execute a successful holiday season, or we will be going away."

All but one of our landlords supported us, and all appreciated the communication. They understood the situation. They signed up to support us. And every single one of them got paid on December 26.

That's what transparency and honest communication create: partners invested in your success.

At Sears Holdings, I watched the opposite approach play out. Eddie Lampert treated vendor relationships purely as transactions. The most damaging example was the relationship with Whirlpool, one of the primary manufacturers of the Kenmore brand. The partnership between Sears and Whirlpool dated back to 1916; a century of shared history.

Lampert's adversarial approach destroyed it. He publicly declared that Sears would "not simply roll over and be taken advantage of" by vendors. He sued Craftsman vendors in contract disputes. The relationship with Whirlpool deteriorated so badly that the 100-year partnership ended in 2017.

The damage went well beyond any potential gain from hardball negotiating. It signaled to Whirlpool management that there was no true partnership. It was simply a transaction, and a one-sided one at that. Within a year of losing Whirlpool, Sears filed for bankruptcy.

Baker followed the same playbook at Saks. He stopped paying vendors. He stretched payments. He played hardball. Vendors responded by walking away. And now Saks Global is in bankruptcy, with vendors owed an estimated $800 million.

The Leadership Lesson

Here's what Richard Baker and many financial engineers never understood: you cannot cost-cut your way to luxury. You cannot financial-engineer your way to brand trust. You cannot real-estate-deal your way to customer loyalty.

Luxury retail requires care. Care for the vendors who supply the merchandise that make your stores destinations. Care for the customers who expect an experience that justifies paying full price. Care for the employees who create that experience every day. Care for the brand's heritage and the communities where these stores have stood for generations.

Baker brought none of that. He brought deal-making skills and real estate instincts to a business that demands relationship-building and operational excellence. He treated century-old brands as assets to be leveraged rather than legacies to be nurtured.

The result was predictable.

Lead with Purpose

Purpose-driven leadership isn't optional in retail; it's existential. Baker never defined a purpose beyond deal-making. There was no vision beyond financial engineering. His principles appeared to center on extracting value rather than creating it.

When a leader operates this far outside their purpose and competency, destruction is inevitable. The question isn't whether it will happen, but when.

The new CEO, Geoffroy van Raemdonck, has experience turning around Neiman Marcus through its previous bankruptcy. He knows the business. He knows the customers. He knows Dallas. Whether he can rebuild the trust that Baker destroyed remains to be seen.

But this much is clear: sustainable leadership requires more than deal-making skill. It requires purpose, vision, and principles that put the business; and the people who depend on it; at the center. It requires the humility to recognize what you don't know and the wisdom to stay in your lane.

Baker never had that humility. And now three of America's most iconic luxury brands are paying the price.

Be well,

Ron

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© 2025, Ron Boire, and The Upland Group LLC. Lead with Purpose™ and The 51% Rule™ are trademarks of Ron Boire

I help leaders and organizations Lead with Purpose™.

Want to Lead with Purpose™, contact me at ron@uplandgroup.us, ron@valize.com, or connect with me on LinkedIn atlinkedin.com/in/ronboire/ or Twitter @ronboire

Ron partners with senior executives, boards, and leadership teams to create long-term personal and business growth strategies that deliver lasting impact. His work blends 35+ years of leadership experience running businesses as large as $30B with cutting-edge innovation frameworks developed alongside Rita McGrath, one of the world’s top strategic thinkers.

Ron has served as CEO or business unit leader at Sony, Best Buy, Sears Canada, Barnes and Noble, and Brookstone, working with private equity giants such as KKR, Bain Capital, and TH Lee, as well as sovereign wealth funds including Temasek. I’ve learned from both successes and setbacks, and I bring those lessons to the leaders I coach and advise.

Ron also lectures regularly at Columbia Business School and Syracuse University’s Whitman School of Management as part of the U.S. Army’s FA59 Strategy Group program.

If you’re looking for a trusted partner to help you and your organization Lead with Purpose™, drive innovation, and achieve measurable results, you can contact me at ron@uplandgroup.us.

Specialties: CEO & Board Advisory, Leadership Coaching & Development, Business Transformation & Innovation Strategy, Values-Based Leadership Frameworks, High-Stakes Turnarounds & Growth Acceleration, Keynote Speaking , Ivy League Executive Education

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